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OECD Reviews of Regional Innovation
Competitive Regional
Clusters
NATIONAL POLICY APPROACHES
© OECD 2007
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FOREWORD
Foreword
N ations and regions are struggling to remain competitive and adapt in the context
of globalisation. The regional specialisations built up over decades are transforming
rapidly. Many regions that were historically production centres are losing out to
lower-cost locations and are reorienting their activities to higher value-added non-
manufacturing industries or R&D-intensive manufacturing niches. Yet, given that
even some of these upstream activities have begun to be off-shored to lower-cost OECD
and non-OECD countries, the question for policy is how durable are the competitive
strengths on which regional economies are based.
The public sector response has been an increased attention to the importance of
linking firms, people and knowledge at a regional level as a way of making regions
more innovative and competitive. This new approach is visible across a number of
different policy fields. Evolutions in regional policy, science and technology policy and
industrial/enterprise policy are converging on the objective of supporting clusters at
the regional level.
Why are cluster-based policies popular, again? The report does not seek to engage
in a debate about the definition of clusters or related concepts. Furthermore, there are
still many unanswered questions regarding the effectiveness of policies to promote
clusters in such a diverse range of regions and sectors. Many of the latest programmes
do not even use the word cluster but they still share many of the same broad goals.
Therefore, the purpose of this report is to identify trends and best practices in cluster-
based approaches with respect to programme objectives, targeting, instruments and
inter-governmental role sharing.
This report is part of the work by the OECD Territorial Development Policy
Committee on competitive and innovative regions. Upcoming publications include a
companion volume to this publication focused on regional-level strategies in
conjunction with Nutek, the Swedish Agency for Economic and Regional Growth, as
well as a series of Regional Innovation Reviews.
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ACKNOWLEDGEMENTS
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TABLE OF CONTENTS
Table of Contents
Executive Summary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Part I
Synthesis Report
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TABLE OF CONTENTS
Bibliography . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 139
Part II
Case Studies
List of boxes
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TABLE OF CONTENTS
List of tables
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TABLE OF CONTENTS
List of figures
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TABLE OF CONTENTS
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ISBN 978-92-64-03182-1
OECD Reviews of Regional Innovation
Competitive Regional Clusters
© OECD 2007
Executive Summary
While the cluster concept is not new and remains subject to debate, national
programmes based on a cluster model continue to be prominent and are
adapted to an increasingly wide variety of contexts. The goal of the report is not
to revisit a theoretical debate regarding definitions but rather to understand
why, in practice, there is renewed policy interest in supporting clusters.
Programmes use a range of cluster-type definitions and approaches but start
from common assumptions about the value of the agglomeration of firms and
the importance of linking people, skills and knowledge at a regional level.
A number of basic motivations lie behind support for clusters. There is strong
quantitative evidence that many industries remain relatively concentrated in
specific regions and those firms and research generators in proximity can out-
perform their counterparts located in less rich environments. Countries are
seeking to strengthen or replicate the success factors that have encouraged the
concentration of innovative firms associated with the knowledge economy.
They are also looking for instruments that can help maintain employment and
promote restructuring and adaptation in other sectors. Furthermore, clusters
are a convenient and pragmatic organising principle by which to focus
resources and build partnerships. A clear rationale for the public sector to
support clusters concerns the transaction costs and co-ordination costs to bring
the appropriate actors together.
Nevertheless, there are risks related to the use of a cluster approach generally,
as well as with more specific risks relating to the design of these programmes.
Insufficient economic diversification, lock-in (in the sense of being tied by long-
term investment strategies to supporting specific sectors and being unable
subsequently to change track) or over-reliance on key firms are among the
dangers that are associated with the cluster approach. Other concerns relate to
how effective the public sector can be in identifying instruments that can help
firms to react to very rapid changes in global markets and production systems.
11
EXECUTIVE SUMMARY
Cluster policies linked to regional policy often focus on so-called lagging regions,
including regions undergoing industrial restructuring and geographically
peripheral regions. In addition, several initiatives originating in other policy
families have incorporated a clear regional dimension, reflecting the recent
emphasis in science and technology as well as enterprise policy on the
importance of regions (such as regional innovation system concepts).
Industrial policies with cluster programmes tend to focus either on the drivers of
national and regional growth or focus on the needs of SMEs. The cluster approach
provides a more transparent, inclusive and potentially less trade-distorting
framework for efforts to strengthen strategic sectors than the prior policies of
supporting large and often state-owned firms. Programmes to support SMEs
started as early as the 1980s and tend to focus on building critical mass for export,
access to information and technology absorption. Programmes that focus on
disadvantaged regions also tend to be closely linked with SME policy.
Most national programmes in OECD countries link more than one policy stream,
either explicitly or implicitly. A notable trend is the emergence of innovation as
an objective in policies other than those directly related to S&T policy. A few
programmes integrate all three policy streams – regional, S&T and industry/
enterprise – in some cases involving considerable resources and registering
high on the country’s public policy agenda. A key question is whether one
programme can address all those objectives simultaneously. Over time, these
policies have generally transitioned from SME-based programmes to those
supporting national competitiveness clusters and they increasingly focus on
technology and innovation.
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EXECUTIVE SUMMARY
These choices are not always evident. Focusing on leading regions that drive
national growth is arguably an efficient means to boost national economic
performance. However lagging regions detract from social cohesion and can be a
drag on national growth. Supporting dynamic sectors may give them a
competitive edge with important technological spillovers for the wider economy,
while refocusing exposed sectors to new opportunities can preserve employment
and promote restructuring of regional economies. Improving opportunities for
certain priority sectors helps to focus resources but often involves predicting the
evolution of volatile and fast-moving product markets. On the other hand,
providing a blanket cluster programme for all sectors or regions can dilute
available resources and focus.
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EXECUTIVE SUMMARY
approaches which take into account a wider range of selection factors but such
processes are then subject to other political influences. Several programmes
have used a hybrid approach.
In general, the instruments used in these programmes are of three distinct types:
1) engagement of actors; 2) collective services; and 3) larger-scale collaborative
R&D. In terms of engaging actors, key issues include: the role of facilitators, the
level and type of interaction desired, the existence of a formal cluster initiative,
and the spatial considerations of the cluster. For the programmes that emphasise
collective services (e.g., business advice, skill development or joint marketing) a
key consideration is how to target services in a way that does not substitute for
private provision. Finally, collaborative R&D projects through cluster programmes
tend to involve more than one research institution or university in co-operation
with several firms and often tap into external R&D funding sources and
programmes.
In general, the funding patterns of these programmes can be broken down into
three basic categories. The first category for instruments to engage actors tend
to spend less than EUR 100 000 per cluster per year for three years or less. A
second category of spending includes programmes that emphasise service
delivery and support for collaborative projects, including “light” R&D, with
spending from between EUR 100 000 to approximately EUR 1 million per cluster
annually over several years. A third category for “heavy” R&D projects includes
projects that spend over EUR 1 million per cluster annually for periods up to ten
years. Overall it does appear that the level of funding for the majority of these
programmes is relatively modest, although it may be used to leverage additional
funding sources.
Governance frameworks and the spatial nature of the benefits of clusters both
play a role in the development and implementation of policies to effectively
promote regional specialisation and clusters. For such programmes, there are
economic rationales for all levels of government (local, regional, national and
in some cases supra-national) to support them. These rationales are based on
different perspectives on the value of clusters, for example, as the basis for EU
competitiveness policy or a national growth programme at a macro-level
versus as a local employment hub for regions.
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EXECUTIVE SUMMARY
One of the major challenges to clearly identifying what we have learned about
cluster policy is that we lack robust tools to measure whether or not a policy or
programme was successful. Evaluations are not available for all programmes,
although several use some sort of evaluation or monitoring component for
on-going funding decisions. Possible evaluation methods concern: 1) the
performance of a cluster or cluster initiative; and 2) evaluations of the impact of a
particular policy intervention. Both merit stronger analytic frameworks. Despite
these challenges, policy learning, even if not through a formal evaluation, has
provided some very useful input on programme design and cluster processes.
There are also many lessons to be learned in programme design, based on the
practices across OECD countries, that could help at least improve the likelihood
that the programmes will be successful in their ultimate goals.
A first set of lessons learned concerns the degree to which these programmes
are appropriate, realistic and flexible enough to achieve their goals. First, there
needs to be a compelling reason for why a cluster policy, as opposed to another
policy that may be open to all firms, is the most appropriate to achieve the
desired goals. Often the stated goals of these cluster-type programmes are
broad or vague, seeking generally to enhance competitiveness or innovation
capacity. This lack of clarity in turn makes it difficult to select the right targets
and establish programme funding levels and duration that are adequate to meet
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EXECUTIVE SUMMARY
those goals. Given that these clusters may be in different lifecycle stages, region
types or sectors, programmes are more likely to be successful when there is a
certain degree of flexibility.
A second set of lessons learned relates to policy coherence within and across
levels of government. Because these policies are emanating from at least three
policy streams, it becomes even more important for policy makers to have a
clear understanding of what other policies exist and how they can work
together or in a complementary fashion. Given the importance of clusters to a
particular region’s economic health, as well as their importance for national
competitiveness goals, the policies are developed at different levels of
government. The interests of each level, as well as their respective resources
and capacity, are important considerations in the articulation of national and
regional level programmes.
A third set of lessons learned is about the risks involved in such policies, which
are often related to insufficient private sector engagement. The long-term
effectiveness of such policies depends on the private sector continuing to act after
a programme ends. Even during a programme period, it is the private sector
that is best equipped to react in a timely manner to market changes. Several
programme evaluations have noted the excessive public sector role and the
unsuccessful public sector exit strategy. There are also general risks for
supporting clusters. One common problem is the ability of the public sector to
“pick winners”. Other risks include locking in existing clusters and technologies,
making it more difficult for other clusters or technologies to develop. Careful
policy design can help mitigate these risks if they are addressed explicitly.
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INTRODUCTION
Introduction
W hile the cluster concept is not new and remains subject to debate, national
programmes based on a general cluster model continue to be prominent and are
adapted to an increasingly wide variety of contexts. This study assesses different
national level strategies and instruments used to promote regional specialisation
and clusters. The theoretical concepts are not new and the debates continue
about the empirical evidence supporting the benefits of regional specialisation
and clusters. The goal of the report is not to revisit a theoretical debate regarding
definitions. Rather, it seeks to understand why, in practice, there is renewed
policy interest in promoting specialisation and clustering as both a general
economic development tool and a means to achieve greater regional and national
competitiveness. These national level initiatives have been complemented by
numerous programmes at the local level.
The 26 programmes across 14 countries explored in the case studies, as
well as other programmes cited in the report, adopt a variety of approaches to
the cluster concept. They range from legally sanctioned statistical definitions to
self-defined clusters to university-hub innovation systems. The countries
also vary in the objectives of their programmes ranging from national
competitiveness clusters and strategic high-technology sectors to much smaller
scale groupings of co-located firms. The countries studied in North America,
Europe and Asia also vary in terms of governance structure between federal,
unitary centralised/decentralised and unitary regionalised systems. The focus
of the analysis is on national level policies, however because not all countries
had a national policy or have delegated that competency to lower levels of
government, in some cases a broad regional cluster policy was considered.
The case study countries illustrate that even for different sets of
objectives and targets, the programmes share a number of commonalities.
They all recognise the benefit of promoting linkages among actors to achieve
the theoretical benefits of clusters. This is true not only of interactions among
firms but also between firms and research institutions. These programmes
share similar tools to address both leading high-technology industries and
restructuring industries. A significant number of countries have adopted a
strategy of using multiple programmes that in different ways support clusters
and regional specialisation. The list in Table 0.1 illustrates some of the most
prominent of such policies in each case study country. While this is not an
exhaustive list of all policies, it reveals the breadth of policy approaches and
tools used by OECD countries.
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INTRODUCTION
Canada National Research 2000 5 years, NRC Technology Cluster Initiatives foster
Council (NRC) in second cycle the development of innovation-driven clusters
Technology Cluster in regions across Canada.
Initiatives
Czech Klastry 2004 3 years, 2004-06 Klastry (clusters in Czech) supports
Republic (extension 2007 the development of sectoral competencies
to 2013) and networking, mainly among firms,
in all regions outside of Prague and with support
from EU structural funds.
Finland Centres 1994 On-going The Centres of Expertise support
of Expertise (annual funding) the development of expertise, firm creation
and innovation in different regional urban hubs,
usually in conjunction with technology parks.
National Cluster 1997 Varied, This strategy supported Finland’s most
Programme approximately prominent sectoral industry clusters as selected
3 years by different sectoral ministries through increased
R&D financing for collaborative projects.
France Pôles 2005 3 years This is France’s main competitiveness policy
de compétitivité (2005-07) and it supports collaborative industry-research
projects. It attempts to serve multiple purposes
by supporting both “international” and “regional”
oriented clusters.
Local Production Late 1990s On-going The SPL programme supports networking
Systems (SPL) among small firms in French industrial districts.
Germany BioRegio 1995 8 years BioRegio serves to concentrate research funds in
selection 1996-2003 a limited number of regions to support
biotechnology, a sector of strategic national
interest.
InnoRegio 1999 7 years InnoRegio seeks to improve the innovation
through 2006, capacity of the lagging new Länder in Eastern
next phase Germany with support from EU structural funds.
planned
GA-network 2005 On-going The purpose of this funding negotiation tool
initiative between the federal level and lagging Länder is
(Joint Task) to provide funding for projects that improve
collaboration among regional actors
with a strong research focus.
Italy Law 317(91) 1991 On-going This law, and its subsequent revisions to improve
flexibility in its application, established
a framework for regional governments to support
consortia of small firms.
Technological 2003 4 years, to 2006, Technological Districts have been created
Districts next phase in the context of science and technology policy
expected to improve collaboration for the funding,
research and application of results in fields
with strong commercial interest and social value.
EU structural funds were used for Southern Italy
districts.
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INTRODUCTION
Japan MEXT Knowledge 2001 5 years, These Japanese knowledge clusters are centred
Clusters to 2005 around key universities and seek to promote
greater university-industry collaboration.
METI Industrial 2001 5 years to 2005; The Industrial Cluster Programme supports
Clusters Phase 2 2006-10 SMEs and research links in a range of regional
area types with a strong focus on the triple helix
relationship (i.e., effective relationships among
industry, university and government), business
incubation and support services.
Korea Innovative Cluster 2004 5 years, 2004-08 The Innovative Cluster Cities are large industrial
Cities (Phase 2 complexes in selected regional centres that need
planned) to convert from manufacturing centres
to innovation systems.
Netherlands Peaks in the Delta 2005 Undefined This nationally sponsored programme seeks to
(minimum support region-specific opportunities of national
5 years) significance by reorienting pubic policy to build
on the nation’s strengths (peaks). Regions
covering most of the country identify a spatial
economic development strategy, including
their own priority clusters for support.
Key Innovation 2005 Undefined The Netherlands innovation strategy seeks
Areas (minimum to focus resources on key innovation areas
5 years) that have internationally strong performance
and commitment of stakeholders.
Norway Arena Programme 2001/02 On-going This programme supports innovative networks
(annual funding) to strengthen the interaction between
the business sector, knowledge providers and
the public sector using a flexible approach with
respect to sector, region and development stage.
Centres End 2005 On-going The NCE programme seeks to initiate
of Expertise (NCE) (annual and enhance co-operative innovation
competitions: and internationalisation processes in a limited
up to 10-year number of clusters with potential for
cycles) innovation-led growth.
Spain; Competitiveness 1991 On–going This early and on-going cluster policy to develop
Basque clusters the Basque Country’s competitiveness focuses
Country on the development of cluster initiatives
in the largest industries in the region.
Sweden VINNVÄXT 2002 On-going (cycles VINNVÄXT is the leading programme
of 10-year of VINNOVA, the Innovation Agency, to support
periods, in third collaborative research with a strong potential
round) for innovation.
Visanu 2003 3 years, Visanu is a joint programme across
ended 2005 three Swedish agencies to support clusters
by engaging actors and promoting knowledge
sharing across clusters.
Regional Cluster 2005 5 years The Regional Cluster programme is a follow-up
programme (ending 2010) to the Visanu programme and sponsored
by Nutek, the Swedish Agency for Economic
and Regional Growth. Its primary focus is
to support international competitiveness
with market-focused assistance.
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INTRODUCTION
United DTI/RDA/DA 2000 On-going The UK Department of Trade and Industry (DTI)
Kingdom cluster support (depending supports a range of cluster initiatives designed
programmes on the region) and implemented by the Regional Development
Agencies (RDAs) and the Devolved
Administrations (DAs). Programmes vary but
have included commissioning regional mapping
studies, identifying and building links
with important regional clusters and using
clusters as the vehicle for wider economic
development initiatives.
United States, Georgia Research 1990 On-going GRA is a private sector initiative to channel state
State Alliance R&D funds to industry-research
of Georgia collaborative projects at different stages
in the commercialisation process as well as
attract top researchers to the state.
United States, Oregon Cluster 2003 On-going This strategy is helping to refocus the state’s
State Industries economic development efforts around
of Oregon the identified industry clusters, notably in this
first stage by better understanding actual cluster
linkages.
Oregon Cluster 2005 On-going The Network promotes the cluster concept,
Network supports knowledge sharing among cluster
initiatives and serves as a nexus for helping
to inform public policy to better serve the needs
of different clusters.
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PART I
Synthesis Report
OECD REVIEWS OF REGIONAL INNOVATION: COMPETITIVE REGIONAL CLUSTERS – ISBN 978-92-64-03182-1 – © OECD 2007
ISBN 978-92-64-03182-1
OECD Reviews of Regional Innovation
Competitive Regional Clusters
© OECD 2007
PART I
Chapter 1
23
I.1. WHY ARE CLUSTER POLICIES POPULAR, AGAIN?
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I.1. WHY ARE CLUSTER POLICIES POPULAR, AGAIN?
private institutions. In studies of innovative clusters, the OECD has noted the
importance not only of firms but also knowledge-producing agents and
customers (OECD, 1999a and 2001). Another frequently used cluster definition
includes regional institutions in the equation as well:
[Clusters are] geographically close groups of interconnected companies and
associated institutions in a particular field, linked by common technologies
and skills. They normally exist within a geographic area where ease of
communication, logistics and personal interaction is possible. Clusters are
normally concentrated in regions and sometimes in a single town (Porter, 2003).
While Porter’s definition has become widely used, there are also a
number of other terms that describe similar processes and structures (see
Box 1.1). In each definition, the concept of externalities is at the heart of the
analysis, notably the ability of firms to profit from improvements generated
outside the firm itself and without its own investment. Policy makers are then
called on to facilitate the generation of these positive externalities (spillovers).
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I.1. WHY ARE CLUSTER POLICIES POPULAR, AGAIN?
Source: Adapted from EC and Enterprise Directorate-General (2002), Regional Clusters in Europe:
Observatory of European SMEs (No. 3/2002), European Commission, Brussels.
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I.1. WHY ARE CLUSTER POLICIES POPULAR, AGAIN?
Source: Principal source EC and Enterprise Directorate-General (2002), Regional Clusters in Europe:
Observatory of European SMEs (No. 3/2002), European Commission, Brussels.
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I.1. WHY ARE CLUSTER POLICIES POPULAR, AGAIN?
north-east and central Italy, where competitive advantages arose from the
environment rather than the capabilities of the firms alone. Statistical studies on
these regions of Italy have identified manufacturing clusters and shown their
positive results in terms of productivity and employment creation over the 1970s
and 1980s. For example, Sforzi (1990) identified over 60 industrial districts and
documented their strong performance. A more recent study by the Bank of Italy
likewise identified a significant number of recognisable manufacturing clusters
in the country and found that firms located in these districts recorded stronger
growth than firms in the same sector located outside such clusters. These results
have reinforced discussion of the theoretical benefits of clustering and have also
helped to promote interest in clusters in other places.
At the same time, other studies have questioned the validity of the cluster
hypothesis. They assert that problems of definition and measurement make
empirical evaluation of the relative performance of clusters and, in particular,
the origins of any difference with non-clustered industries statistically dubious
(Martin and Sunley, 2003). What is certain is that much of the evidence to
support the view that clusters are more productive is case specific and large
scale empirical reviews are extremely rare, with the review of the Bank of Italy
standing out as the most extensive research effort. Other researchers have
found that clusters tend to be strong in only certain parts of the production
process or in particular sectors or sub-sectors, further questioning the assertion
that clusters can be a generalisable model of economic organisation or an
appropriate target for public policy.
Regional specificities. The idea that productivity gains are generated on the
back of region-level interaction is supported by a large body of research beyond
Italy. One influential concept has emphasised the vertical disintegration of the
Fordist production system and the rise of an alternative production model. This
new model is based on small specialised firms, with lower transaction costs and
greater flexibility generating productivity gains and incremental innovation. A
string of observations in the 1980s supported this hypothesis including not only
the robust competitiveness of more traditional industrial districts in Europe but
also the clustering of high-tech firms in the United States. Michael Porter was
influential in broadening interest in clusters and identifying the factors
that promoted their formation and competitive success. According to Porter,
“regions compete in providing the most productive environment. It is not the
industry that matters but the way the firm competes, its use of the advantages
that the local environment brings”.2 The work of Michael Storper was also
influential in promoting the view that a basket of “untraded interdependencies”
(labour markets, regional conventions, norms and values, public or semi-public
institutions, etc.)3 can foster an environment conducive to innovation (Storper
and Venables, 2004).4
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Marshallian externalities
Labour market pooling Labour cost savings due to access to specialised skills, especially
in an environment where quick turnaround is important
Greater variety of specialised Access to a local supplier base that has more product variety and a high degree
intermediate goods and services of specialisation
(Tacit) knowledge spillovers Access to tacit knowledge in geographic proximity by means of both formal
processes as well as through such informal channels as knowledge leakages
made possible by casual inter-firm interactions
Cost advantages
Transportation Transportation cost savings due to geographic proximity, especially in the case
of just in time delivery contracts
Trust Transaction cost savings due to an environment that encourages trust
Source: Adapted from Lublinski, A. (2003), “Does Geographic Proximity Matter? Evidence from
Clustered and Non-clustered Aeronautic Firms in Germany”, Regional Studies, Vol. 37, pp. 453-467.
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uf O
em
Te
ro
ve
Ele
ac
Ch
n-
lp
or
No
eta
an
ot
m
M
M
Source: OECD (2006) “The Changing Nature of Manufacturing in OECD Countries”, OECD internal
document DSTI/IND(2006)1, 13 February 2006, using data from the OECD STAN Structural Analysis
Databases: 2005 Edition, OECD, Paris.
internationalise. At the same time, there are examples of OECD countries that
have maintained or even increased levels of employment in sectors that are open
to off-shoring. For example, employment in ICT equipment actually grew over
the 1990s in Ireland, Mexico, Finland and Sweden, while it declined in most other
OECD countries (OECD, 2006).
In terms of clusters, many regions that were production centres in a
particular sector or sectors are now still specialised in that activity but are no
longer involved in production or to a much lesser extent. Car producing
regions like Turin, Italy or Gothenburg, Sweden for example, are still present in
the automotive sector, but their areas of expertise are increasingly in non-
manufacturing or niche activities (GPS technology or safety equipment
respectively). Stockholm is still a mobile telephony hub, but phone manufacture,
which until only a few years ago was centred in the region, has moved elsewhere
and the region is now mainly involved in design, new product development,
and network services related to ICT. Regional employment levels in ICT
manufacturing are still noticeably high, but a large proportion of those
manufacturing workers are in fact engaged in service related activities. This kind
of transition has important consequences for regional development, with respect
to investment, infrastructure and employment, among other dimensions.
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I.1. WHY ARE CLUSTER POLICIES POPULAR, AGAIN?
Globalisation and the spread of new ICT technologies seem to make possible
a shift from local to global systems of production that can in theory preserve
knowledge flows without the need for clustering. Rather than emphasising
proximity-based transfers of knowledge, an alternative model is emerging that
assumes that knowledge can be spread throughout the production system across
large distances. This has led some observers to argue that locally derived
advantages are no longer as relevant as they were in the past. They accept that
economies of scale can still be achieved in certain regions through highly localised
concentrations of specific knowledge, skills and expertise. Concentration of
technological advantages creates economies of scale in particular technologies
that in turn provide employment and generate economic outputs within similar
high-technology industries (e.g., biotech industries in the Boston area). Also,
economies of scope can exist if these regions are able to reap the intangible
benefits of learning and the co-operative atmosphere embedded in these
agglomerations (spillover effects). However, they argue that “economies of scale
and scope embedded within specific regions are only advantageous to those
regions and bring about regional development insofar as these region-specific
economies can complement the strategic needs of trans-local actors situated
within global production networks” (Coe et al., 2004).
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I.1. WHY ARE CLUSTER POLICIES POPULAR, AGAIN?
Notes
1. Regional specialisation in areas of comparative advantage in the production of
tradable goods and services will generate complementarities rather than
competition and cross-border trade will increase. In addition, capital and labour
will migrate across the open border from areas of relatively over-supply to where
they are more scarce, leading to an equalisation of factor prices.
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38 OECD REVIEWS OF REGIONAL INNOVATION: COMPETITIVE REGIONAL CLUSTERS – ISBN 978-92-64-03182-1 – © OECD 2007
ISBN 978-92-64-03182-1
OECD Reviews of Regional Innovation
Competitive Regional Clusters
© OECD 2007
PART I
PART I
Chapter 2
39
I.2. WHERE DO THE PROGRAMMES ORIGINATE?
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I.2. WHERE DO THE PROGRAMMES ORIGINATE?
Table 2.1. Policy trends supporting clusters and regional innovation systems
Policy stream Old approach New approach Cluster programme focus
Regional policy Redistribution from Building competitive ● Target or often include lagging regions
leading to lagging regions by bringing ● Focus on smaller firms as opposed to larger
regions local actors and assets firms, if not explicitly than de facto
together ● Broad approach to sector and innovation
targets
● Emphasis on engagement of actors
Science Financing of Financing ● Usually a high-technology focus
and technology individual, single- of collaborative ● Both take advantage of and reinforce
policy sector projects in research involving the spatial impacts of R&D investment
basic research networks with industry ● Promote collaborative R&D instruments
and links with to support commercialisation
commercialisation ● Include both large and small firms; can
emphasise support for spin-offs and start-ups
Industrial Subsidies to firms; Supporting common Programmes often adopt one of the following
and enterprise national champions needs of firm groups approaches:
policy and technology ● Target the drivers of national growth
absorption (especially ● Support industries undergoing transition
SMEs) and shedding jobs
● Help small firms overcome obstacles
to technology absorption and growth
● Create competitive advantages to attract
inward investment and branding for exports
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science and technology policy makers are taking increasing account of the
importance of region-specific factors, in particular the role of proximity, in the
innovation process.
The transition in regional policy towards capitalising upon local assets
argues logically in favour of policies that strengthen existing regional
specialisations. These specialisations are often based on accumulated skills
and practices embedded in the local labour force or draw on specific local
resources or infrastructures. Developing strategies that will have an impact
on the competitiveness of a given region involves identifying the sources or
potential sources of the region’s competitive advantage. In many regions,
collective characteristics pertaining to groups of firms or sectors provide a
source of productivity gain. These collective advantages – often found in
clusters or productive systems – stem from the historical development of local
sectors and links with the region. They are also contingent upon factors such
as firm size and structure, the level of specialisation (agglomeration effects
related to specialisation of industrial production, and any spillovers such as
high innovation capacity and concentration of specialised workers), use of
advanced technologies, and the use of networking as a business practice.
Regional policy instruments with competitiveness rather than equity or
other objectives use cluster approaches as a means of aggregating key economic
actors in regions. This geographic focus results in policies to promote greater
linkages among actors in proximity or to reap the benefits in the region of the
knowledge produced there. Innovation is very prominent as an objective in
programmes to support specialisation, even in regions where the industry or
industries concerned are not those most closely associated with research-based
innovation. One of the reasons behind the effort to network actors is to generate
innovation, including small-scale, incremental and process innovation.
One appealing feature of the approach in the context of regional policy is
that it seems to be applied in both advanced regions with dense knowledge
infrastructures and in non-core or former industrial regions. For example, in
leading regions with a portfolio of economic activities, the policy goal is
often to support specialisation in a subset of these sectors or clusters. In other
regions, those where traditional manufacturing industries are strongly
embedded, cluster policies are designed to help the region diversify into new
activities or change the value structure of current specialisations. This shift in
regional policy approaches acknowledges that the industrial base in both
leading and lagging regions is undergoing transformation and the policies
offer one way to improve the linkages and facilitate the transformation.
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Discussion
Lagging regions. Cluster programmes emanating primarily from regional
policies usually include, if not target exclusively, lagging regions. When a policy or
programme targets the clusters that drive national growth, this is usually done
out of an enterprise or innovation policy. For example, Germany’s InnoRegio is
targeted only to the Eastern Länder. The objective of the initiative, which is
supported by the EU Structural Funds, is to help resolve the significant economic
performance gap between the Eastern and Western parts of the country. Korea’s
Innovative Cluster Cities programme is part of a Plan for National Balanced
Development to promote economic growth outside of the congested capital city
metropolitan area. Sweden’s Visanu programme, Norway’s Arena programme
and Finland’s Centres of Expertise seek to promote regional growth throughout
the country, not only in the leading centres. Finally, while the cluster approach is
common in Italy’s central and north-east regions, the model underlies a number
of initiatives in southern Italy that are designed to create synergies and improve
the diffusion of technology in lagging regions.
Smaller firms. Given the orientation, instruments and limited funding levels
of regional policy-based cluster programmes, they tend to be more suited to
small firms than to large firms. This SME focus is partly at least a result of the
theoretical underpinnings of a number of programmes. Many of the earlier
initiatives were based mainly on industrial district or local productive system
models. The French SPL programme, for example, is designed exclusively for
groups of small firms. It has a strong regional policy influence because most of
the targeted local labour markets are outside the major urban centres. Many of
these regions are strongly specialised in one or a limited number of products
and industries that are now faced with increasing international competition
(i.e., exposed local labour markets). While Visanu in Sweden is open to all firm
sizes and does include large firms, the role of large firms in the cluster is more
like that of a mentor. Evaluations of the Finnish Centres of Expertise noted that
the programme was more attractive to small firms, albeit larger firms have
begun to participate more actively.
Broad innovation and sector approach. Many of these regional policy
programmes have included an innovation focus, with Finland’s Centres of
Expertise being an early example. The programme design is consistent with the
country’s strong R&D and innovation focus generally. Started in 1994, the first
Centres began as part of an urban policy; therefore the first round participants
were located in the country’s largest urban centres. That vision expanded so as
to be open to all regional city hubs. To account for the diversity in needs
and capabilities of region types, the various Centres have emphasised different
instruments. The new Norwegian Centres of Expertise, at the initiative of the
Ministry of Local Government and Regional Development but implemented by
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Raahe-Nivala-Tornio CoE
Metal and maintenance
North Carelia CoE
services
Wood technology and forestry, Network CoE
polymer technology and tooling for tourism
Kokkola Region CoE
Chemistry
Mikkeli Region CoE
Composite and coatings
Source: Government of Finland, Ministry of Interior’s Department for the Development of Regions.
were the strength of the existing science base, evidence of prior collaboration,
particularly in biotech fields, and the strong presence of private actors and private
sector investment. The city of Jena in Eastern Germany was also included because
it has a strong industrial tradition and was a target for economic development in
the Eastern Länder. The subsequent extension of the programme to 14 additional
sites through the BioProfile programme was seen as a sign that other German
regions were becoming more active and successful in developing business in the
biotech field and that this kind of policy intervention could catalyse growth in
regions with some potential but less obvious capacity. In other words, the
national champions approach has evolved into a programme with an additional
regional development/promotion function.
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research capacities are located in a limited number of areas. In the United States,
the ability of different states to capture federal research funds is a measure of
success and actively tracked at both federal and state levels. The leading recipient
states, such as California and Massachusetts, are those that possess a high
number of leading research universities. To support R&D in US states that do
not succeed in the competitive allocation process, the EPSCoR programme
(Experimental Program to Stimulate Competitive Research) and the IDeA
programme (Institutional Development Award) seek to broaden the geographic
distribution of certain R&D funding to states that under-perform in capturing
federal R&D funds.
The effectiveness of these R&D investments is based not only on the
university or research institution in isolation, but also its embeddedness in a
regional milieu with strong firm linkages. Research excellence can cultivate
strong links with business, including spin-offs from university research
and the appearance of innovative start-ups in areas adjacent to the
university (often on business park premises managed by the university). The
effectiveness of the R&D investment is therefore contingent on clustering
processes. The United Kingdom’s selection process has clearly accounted
for research/industry relationships in its fund allocation process, with the
success of Cambridge and Oxford in generating innovative new firms
around their respective campuses being rewarded with higher allocations.
For example, Cambridge University’s research block grant from the central
government is larger than that destined for any of the metropolitan areas outside
London, such as Manchester or Birmingham, even though in most cases these
cities have four or five major universities.
Discussion
Technology, an OECD country priority. Given the prominence of technology to
OECD country competitiveness, the vast majority of the cluster programmes
have a strong R&D/science and technology link. Several of the highlighted
programmes are very prominent in the overall innovation strategy of
the country and therefore involve more substantial funding than other
programmes to promote regional specialisation, such as those targeting SMEs
or those aimed at disadvantaged regions. In some cases, the framework for a
more cluster/networking approach has been set out in new science or R&D
laws or plans (for example in Germany, Italy, Japan and the Netherlands) that
have identified how cluster approaches can help achieve better outcomes.
Many programmes have also been developed in conjunction with the
creation of innovation plans and/or innovation agencies that have placed the
issue of innovation as a central objective of science and technology investment.
For example, VINNVÄXT was developed as the flagship programme after
the 2001 creation of VINNOVA, the Innovation Agency in Sweden. France’s Pôles
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investments to locations in the state that make the most sense strategically in
terms of economic impact and actors involved, including established specialty
centres. The Japanese Knowledge Clusters were selected based on the different
research hub specialties of the universities and research institutions involved so
as to reinforce capacities in the different research priorities that had been set out
in the overall national science and technology plan.
This resource allocation prioritisation can go so far as to be focused on a
single strategic sector. For example, Germany’s BioRegio programme supports
an overall biotechnology initiative of the German government to improve the
strength of that sector. Biotechnology was selected based on its strategic
importance to the chemicals and pharmaceuticals industries, which are
traditional strengths of German industry, as well as its importance as an
enabling technology for other sectors. The initiative was designed to help
Germany catch up with the commercial successes that US and UK biotech
firms were enjoying by building stronger links between key research
institutions, large chemicals and drugs companies, and innovative biotech
SMEs (see Table 2.3).
Munich Two universities and large research Roche Diagnostics, a large biotech production site,
institutions plus around 34 biotech companies
Rhineland Highest density of research institutions Bayer plus several medium-sized pharmaceutical
in Europe, including several in biotech companies (around 20 in 1994)
Rhine-Neckar One university and several research Large pharmaceutical/chemicals companies
institutes (Roche, BASF) plus several biotech companies
Jena One university and three research One medium-sized pharmaceutical company
institutes and five biotech companies
Source: Ernst, Holger and Nils Omland (2004), “Vitalisation of Industry through the Promotion of
Knowledge Intensive New firms: The Case of German Biotechnology”, Presentation made at the Japan
Institute for Labour Policy and Training, Tokyo, Japan, 26 March 2004.
The strategic sector approach has been used in a large number of countries
and regions, with biotech standing out as the target sector in many cases,
perhaps too many. A significant number of US states have specific biotech
strategies, most of which use the cluster model. The state of Arizona, for
example, has designated biotechnology as a priority and has established a
cluster policy to trigger expansion of the sector. It has developed a roadmap to
mobilise numerous resources around this sector to: 1) build the state’s research
infrastructure; 2) build a critical mass of bioscience firms; 3) offer a supportive
business climate for bioscience enterprises of all sizes; and 4) encourage young
people to explore and pursue scientific and technical careers. Significant direct
and indirect resources are being channelled into this initiative. Other states
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with similar strategies include Michigan, Ohio and Kansas. In 2001, 41 US states
had some programme aimed at spurring development of the life sciences
industry according to a survey by the Biotechnology Industry Organization
(Cortright and Mayer, 2002).
The risks of trying to achieve sustainable competitive advantage in a highly
sought after strategic sector can be costly. First, there are clear and entrenched
leader regions in biotech. Five metropolitan areas – Boston, San Francisco, San
Diego, Seattle, and Raleigh-Durham – accounted for 75% of the new venture
capital in biopharmaceuticals between 1995 and 2001, for 74% of the value of
research contracts from pharmaceutical firms, and for 56% of the new biotech
businesses formed during the 1990s. Catching up with regions like these requires
significant and long-term investment. Moreover, the decoupling of biotech
research from productive activities in related manufacturing industries means
that successful outcomes upstream are not necessarily going to lead to
employment creation or revenues that can be captured locally. Even in the nine
major US biotech centres, which together account for over 60% of the sector’s
US output and 80% of investment, the sector represents only 3.5% of all
manufacturing employment (Cortright and Mayer, 2002). While biotechnology is
one of the most sought after cluster specialisations across all OECD countries,
there are a number of other sectors that are also attractive because of their high
growth potential, such as ICT. However there will be winners and losers in
these sectors.
Collaborative research and commercialisation. To promote commercialisation
and network support, the programmes of innovation policy place a strong
emphasis on collaborative as opposed to individual research projects.
The organisational structure and funding of the programmes are therefore
designed to facilitate this objective, with respect to both promoting research
alliances and joint ventures and providing funding for the research itself. The
Japanese Knowledge Clusters and Georgia Research Alliance programmes, for
example, both use universities as cluster hubs and use research units within
the university as the focus for developing multi-actor research projects. In
most of the other programmes, if universities and research institutions are
not the hub they are important network partners. There are also explicit
requirements or preferences in project selection for a minimum number of
actors of each type involved in these collaborative projects. This is an
important issue given the concerns about accountability in the use of
public funds. At the same time, the need to build consortia could represent a
disincentive for some potential partners given the transaction costs involved
and also the possible ambiguities regarding intellectual property rights from
joint projects involving both public and private actors.
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* The 1999 Industry Revitalization Law (also known as the “Japanese Bayh-Dole Act”)
reduced obstacles to collaboration between universities and private enterprises and
also allowed private firms to acquire intellectual property rights from publicly-
funded research. This has given stimulus to the growth of Technology Transfer
Offices in Japan, of which there are now 37 (Rissanen and Viitanen, 2001).
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Discussion
Key sectors and drivers of competitiveness. Cluster policy is a key element of
competitiveness policies at national and regional levels. Although somewhat
difficult to define, these policies tend to group measures that target the
productivity of enterprises. Most often they target key sectors or industries,
what can be seen as a somewhat broadened version of the strategy of picking
winners. The Oregon Clusters Programme, the former Finnish National
Cluster Programme, the Basque Country, Spain and the French international
Pôles de compétitivité, among others, share this orientation. They tend to focus
on identifying and supporting clusters that appear internationally competitive
and have growth potential or at a minimum represent the largest sectors of
employment (see Table 2.4).
With the exception of France, the industrial policy programmes in case
study countries that target large clusters used basic statistical cluster mapping
to identify key agglomerations. The principal limitation with this approach is
that it tends to identify employment clusters while the growth engine strategy
can imply a focus on technology-intensive activities that might not employ
large number of workers. In all cases, there is a clear goal of designating these
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Table 2.4. Targeted sectors: Spain (Basque Country), US (Oregon) and Finland
Spain (Basque Country) Finland: National Cluster Programme
US (Oregon) (on-going)
(on-going) (some clusters may be on-going)
clusters with the hopes of organising government support around them, across
levels of government, to leverage resources for these privileged targets.
Another interesting example of this competitiveness approach is provided
by the Regional Development Agencies in the United Kingdom. These RDAs
were established in 1999/2000 and are charged with the task of improving the
performance of business in their regions. Almost from the outset, the
Department of Trade and Industry (DTI) recommended that the RDAs should
use a cluster approach to identify and target resources to the key sources of
regional growth (DTI, 2001). This guidance was prompted by an assessment by
the DTI that clusters were one means by which targeted investment could help
regions transition from dependence on declining industries or low value-added
sectors to the knowledge economy. Each RDA has since developed a strategy
that targets key clusters (usually divided into: existing, established or
embryonic) as the core of its regional economic strategy. One outcome of this
approach, visible also in the United States, is that the focus on growth sectors
leads to some overlapping with respect to the targets of regional strategies.
As shown in Table 2.5, most regions emphasised similar sectors, including
biotechnology, and ICT, while other more traditional industries were targeted in
fewer regions (for example, textiles and manufacturing).
SME support. Often the cluster approach focuses on small firms because of
the additional obstacles they typically face to grow and the clear scope for
policy intervention. Such obstacles include accessing information, attracting
capital or adopting new technology. On the demand side, SMEs need
assistance in formulating their needs. Small enterprise managers are often
not aware of new technology, do not recognise the potential for improvements
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Cluster North East Yorks. East Mids. Eastern London South East South West West Mids. North West
Biotechnology
ICT
Creative industries
Advanced engineering
Food/agro-food
<…>
Manufacturing
Textiles
Source: Higher Education Policy Institute (2004), “Research and regions: An overview of the distribution of research in
UK regions”, Centre for Policy Studies in Education, University of Leeds.
(on their own or through consultants), or lack the financial, organisational and
managerial capabilities to implement new technology. On the supply side,
technology providers and consultants generally do not tailor their products to
local firms. The costs of reaching small firms with relevant information
are relatively high, as are the costs of tailoring equipment to their needs.
Hence, technology markets suffer from problems of information asymmetry,
transaction costs and a lack of scale economies that help justify policy
intervention. Two basic forms of intervention required on these grounds are
technology advice and transfer as well as the provision of other non-financial
services (marketing, logistics advice, exports, accounting, etc.) that are often
supplied by sector-oriented centres (OECD, 1999b). Therefore, to address these
considerations SME policies increasingly emphasise clusters.
The cluster programmes growing out of an SME policy are usually
designed to promote networking among small firms and to provide basic,
collective services to these firms. Italy’s Law 317(91) is perhaps the earliest
example among the case studies. The original measure that gave an
institutional framework for policy making to target clusters was approved in
September 1991. The main innovation of this law was its focus on SMEs and,
in particular, the scope that it gave for providing support to groups of small
firms rather than concentrating only on single, usually large firms. This
approach acknowledged the vital importance of the industrial district model
in the Italian economy and recognized that such districts had, or potentially
had, different policy needs. Article 4 of the law was particularly significant
because it formalises the concept of consortia of small firms and gave
prominence to the provision of collective services for groups of firms.
This idea that SME consortia can be a unit for enterprise policy
intervention has since been taken up in other contexts, though usually as a
programme rather than as a legislative framework. The French SPL programme,
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Box 2.1. IDB and UNIDO: cluster and value chain support
IDB
The Inter-American Development Bank (IDB) has three lines of activity that under
different names and sources of funds fall under the category of projects for clusters or value
chains. They are: 1) the IDB loans; 2) the Multilateral Investment Fund (MIF) operations; and
3) the Small Enterprise Program (SEP).
1) Among the IDB loans, the principal group of operations aimed at fostering cluster
competitiveness is comprised by operations (or components) of about USD 10 million each
lent to the local authorities. This operations line includes support to four Brazilian States
(Sao Paulo, Minas Gerais, Pernambuco and Bahia Blanca), three Argentine provinces (Rio
Negro, Mendoza and San Juan), and Uruguay. One project for regional development
agencies in Chile is under preparation. This type of program typically has two stages: first,
the local counterparts, together with private sector players, prepare the Competitiveness
Strengthening Plans (CSPs), which include: 1) a diagnosis assessing the degree of
competitiveness at both the cluster and firm levels; 2) a strategic plan to promote
competitiveness among clusters and value chains; and 3) a precise definition of actions
the plan includes (objectives, firms comprising the cluster, budget, design, etc.), which,
according to the previously defined strategy, could be financed by the program.
Two different types of proposals can be funded: 1) projects aimed to create externalities
whose benefits are hardly internalized by individual firms; and 2) projects and activities of
groups of firms which are necessary to enhance the overall degree of competitiveness but
also generate highly proprietary internalized benefits. In the second stage the executing
local counterparts implement the actions defined in the CSPs and apply grants that have to
be matched by local counterparts and beneficiary firms. Firms must belong to a network or
cluster previously selected by the programme. Their particular projects have to be prioritized
according to their relevance within the competitiveness strategy, and must meet certain
eligibility requirements to access financing. Neither land, nor infrastructure directly
involved to the production process, nor operating expenses are covered by this line of
activity. On the other hand, the Bank has approved loan operations in Panama, Honduras
and the Dominican Republic, under the name of Competitiveness Programs that identify the
clusters with greater potential, and foster governance and institutional strengthening and
capabilities to enhance the competitive performance of the local clusters.
2) The MIF operations, 18 since 2001, typically refer to two or three specific clusters in
one country or a particular territory, having private executing agencies (either enterprise
associations or private institutions), as recipients of the IDB loans. MIF projects include a
varied typology that include horizontal and vertical networks which frequently emphasize
the link to the territorial productive system, and sometimes focus on the insertion and
integration to broader value chains. Some examples of MIF projects, always linked to
specific locations within each country, are: the shoe, lingerie, and wood furniture clusters
located in specific municipalities of Brazil; the wine and the rhea value chains in Uruguay;
and shoe and ceramics in Guanajuato, Mexico. Other umbrella projects include clusters at
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Box 2.1. IDB and UNIDO: cluster and value chain support (cont.)
the national level in countries such as Colombia and Peru; the supra-national level in
Central America; or at sub-national level such as in the Cordoba province, in Argentina.
Resources from the MIF range from USD 0.5 to 3.5 million of non-reimbursable funds per
project that have to be matched by local counterparts. MIF projects finance part of the cost
of raising awareness of the importance of co-operation and the creation of local networks
of firms. Then, as in the Bank projects, they have two more stages: one for having a
diagnosis and a plan for increasing the competitiveness of the network of firms, and a
second stage for implementing the plan, when MIF resources finance about 50% of
training, technical assistance and co-operative action of firms. MIF project executing
agencies have created a learning community to exchange experiences and analyze specific
issues in their day-to-day activities.
3) Among the SEP activities, the objective of which is to enhance the quality of life for
low-income populations through promoting microentrepreneurial activities, the Bank has
supported about ten operations directed to integrate small producers in value chains and
larger trading firms. These program include both reimbursable and non reimbursable
funds from USD 200 000 to 500 000. Two examples are support of the cacao value chain in
the peninsula of Paria, Venezuela, and support of the recycling of banana industrial waste
in Colombia.
The IDB seeks to continue and strengthen each of these lines of operations to obtain
valuable lessons aimed at better understanding the formation and impact of clusters and
value chains, and how to more effectively foster competitiveness among them.
UNIDO
The United Nations Industrial Development Organisation (UNIDO) has been involved in
promoting industrial clusters in developing countries over the last fifteen years. The
development of clusters of micro-, small- and medium-enterprises is an important
component of strategies to achieve the Millennium Development Goals (MDGs), and most
notably the reduction of poverty. This is because, in large parts of the developing world,
small-scale firms are the main sources of employment and income for the population.
Revitalizing clusters, thus, can be an important step towards raising the well-being of small
producers and workers that would otherwise lack any economic opportunity.
For this reason, UNIDO focuses on those regions and sectors where the survival and
growth of clusters is critical for securing the livelihood of local stakeholders. The main
targets of UNIDO’s intervention are clusters that have a preponderance of micro-
enterprises and home-workers, clusters in labour-intensive sectors (e.g., garments,
leather, food-processing) and those employing women, migrants and unskilled workers.
These groups are the most marginalized and vulnerable segments of the society,
characterised by high exposure to risk and low disposable income. Clusters of artisans or
manufacturers of traditional products are also increasingly exposed to international
competition and often unable to upgrade and improve productivity.
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Box 2.1. IDB and UNIDO: cluster and value chain support (cont.)
In order to address these challenges and enhance the income of small-scale
entrepreneurs, UNIDO leverages on the benefits of clustering: external economies and
collective actions. Agglomeration economies allow firms to specialize in specific tasks, and
account for an increased access to skills, inputs and services. Joint actions help firms
overcome the obstacles due to their small size by pooling resources, sharing investments
and facing common threats.
However, low levels of social capital in under-performing clusters and limited trust among
the local stakeholders can hinder the achievement of these benefits in developing countries.
Thus, UNIDO works primarily on improving interaction among firms and facilitating co-
operation. Once trust is created, entrepreneurs are able to mobilize their limited resources
and combine efforts in order to take advantage of economic opportunities.
The development of social capital within clusters helps them confront a second
dimension of poverty, namely marginalisation and powerlessness. The strengthening of
trust-based relations offers a strong basis to ensure the inclusion of the most vulnerable,
especially women, ethnic minorities and workers with low levels of education. These
dynamics are reinforced through the implementation of complementary interventions
aimed at facilitating access to training and micro-finance. As a result, assets and capabilities
of the actors within a cluster are improved, and their empowerment promoted.
UNIDO also acknowledges the importance of creating a conducive business environment to
facilitate cluster development. This is achieved by favouring the engagement of local
institutions and strengthening linkages between enterprises and support organisations. On
the one hand, UNIDO’s projects are aimed at creating awareness of the benefits of clustering
among all stakeholders. On the other hand, they promote dialogue and partnerships between
the public and the private sector.
Finally, creating a strong institutional framework is crucial to ensure the sustainability of
the intervention. Once this is concluded, the existence of solid mechanisms of governance
will support entrepreneurial initiatives and provide answers to future challenges.
UNIDO has implemented this approach to cluster development in over 15 countries in
Latin America, Africa and Asia thanks to financial support made available by donors such
as Italy, Austria, the United Kingdom, the European Union and Switzerland. Tools and
methodologies have been developed over the years and are now also available through an
on-line toolbox on cluster development available at the address: www.unido.org/psd-policy/.
Source: UNIDO, www.unido.org; IDB, www.iadb.org/mif/v2/supplychains.html; www.iadb.org/sds/mic/publication/
gen_159_4053_e.htm.
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Industrial Regional
Czech Republic: Klastry Programme and enterprise policy
Spain (Basque country): Competitiveness policy Sweden: Visanu, Regional
Clusters Cluster programme
US (Oregon): Oregon Cluster Industries; Italy: Law 317(91)
Oregon Cluster Network France: SPL programme
Linking two policy streams. Most programmes link at least two policy
streams. As previously mentioned, the prominence of science and technology
policy to OECD country competitiveness helps explain the prominence of
linkages with that field. Most industrial policies seek to promote technology
related clusters and most regional programmes acknowledge the importance
of innovation for regional development. Regional policy being by definition
designed to accommodate multi-sectoral needs, it is not surprising that there
are few examples of programmes that exist as regional programmes in
isolation of other policy goals. The programmes that are purely science
and technology or industrial policy are the exception. Even among these
exceptions, the programmes do not necessarily operate in isolation. For
example, the Japanese Knowledge Clusters have organisational ties to the
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Euro Info Centres To serve as a network and provide information, advice and assistance to SMEs 1987
http://ec.europa.eu/enterprise/networks/eic/eic.html on-going
RITTS/RIS Following a common methodology, the project aims to develop regional 1994
innovation strategies. So far, more than 100 regions have participated on-going
www.innovating-regions.org
Innovation Relay To support innovation and transnational technological co-operation in Europe 1995
Centres (IRC) with a range of specialised business support services, mainly between small on-going
and medium-sized companies (SMEs); 71 regional IRC’s have been established
in 33 countries
http://irc.cordis.lu/
PAXIS (Pilot action To boost the transfer of local and regional excellence in innovation and to have 1999-2005
on the an instrument for the co-operation and the exchange of tacit knowledge
mechanisms to and learning among local innovation stakeholders, profiting from each other’s
set-up and develop experience
innovative firms) http://cordis.europa.eu/paxis/
IRE working group The IRE network has been supporting regional authorities in developing 2000-04
on clusters innovation strategies, in which the development of clusters have been
an important part; a working group was set up to work on cluster policies
www.innovating-regions.org/network/whoswho/
projects_extended.cfm?sub_id=26&project_id=8
Thematic network This network brings together regional organisations interested 2001-03
ACENET in the development of processes and methodologies to set up and manage
(Accelerating clusters and company networks
the establishment www.innovating-regions.org/network/whoswho/projects_extended.cfm
of clusters)
Observatory To focus on the knowledge of clusters and compare 34 European clusters 2002
of European SMEs http://ec.europa.eu/enterprise/enterprise_policy/analysis/observatory_en.htm
report on
“Regional Clusters
in Europe”
2002 MAP Project To analyse to what extent clusters and networks do really offer a favourable 2002-03
on enterprise framework for SMEs; to identify examples of good practices related to clusters
clusters and to identify future possible actions
and networks http://ec.europa.eu/enterprise/entrepreneurship/support_measures/cluster/
map_project.htm
Regions To support transnational mutual learning and co-operation between 2003
of knowledge research-driven clusters, bringing together regional authorities and development on-going
initiative agencies, public research organisations, industry and other relevant
stakeholders
http://cordis.europa.eu/era/knowreg_about.htm
Clusters To learn more about cluster development in the EU10; since no systematic 2005-06
in the EU10 mapping of European clusters has been done, another objective is to carry out
new member a more systematic mapping compared to earlier ones
States (report) www.europe-innova.org/
index.jsp?type=page&lg=en&classificationId=5967&classificationName=Cluster
%20Mapping&cid=5981
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Mapping To create a European database on clusters and cluster policies; to establish 2006
and analysis a common methodology throughout the EU-25 and candidate countries on-going
of innovation (based on the same methodology as in “Entrepreneurial innovation in the Future
clusters in Europe member States: Challenges and Issues at stake for the Development of Clusters
of Innovative Firms”); to identify successful clusters for best practice and policy
recommendations including a cross-border dimension
www.europe-innova.org/
index.jsp?type=page&lg=en&classificationId=5967&classificationName=Cluster
%20Mapping&cid=5981
Europe INNOVA To facilitate networking between clusters with a view to intensifying transnational 2005
initiative co-operation and learning between clusters for establishing joint research on-going
projects and developing business strategies
www.europe-innova.org/index.jsp
PRO INNO Europe To develop a new form of transnational innovation policy co-operation, building 2006
upon the results from the European Trend Chart on Innovation and the PAXIS on-going
initiative
http://cordis.europa.eu/innovation/en/policy/pro-inno.htm
Source: European Commission, Entrepreneurship Action Plan-Key Action 6-B – Fostering innovative
clusters http://ec.europa.eu/enterprise/entrepreneurship/action_plan.htm for programmes through 2004
with updates.
This is true for Japan, for example, where a range of small-scale local initiatives to
support traditional and artisanal clusters were developed by METI in the 1980s
and early 1990s that attempted to build local SME networks similar to those
found in northern Italy. These measures were then superseded by the more
comprehensive, growth-oriented METI Industrial Clusters and MEXT Knowledge
Clusters programmes that are featured in the case study. Similar evolutions have
taken place in Denmark, Finland, and Spain (the Basque Country and Catalonia)
to name just a few. The influence of Michael Porter’s work is evident here. Several
countries implemented such programmes after the publication of his book
The Competitive Advantage of Nations (1990), often using tools his team has
developed in that process.
Trend 2: increasing focus on innovation. Another trend is a transition to a focus
on technology and innovation. This trend in cluster programmes follows a
policy change towards more innovation focused industrial policy in general and
the prioritisation of instruments related to innovation among the various forms
of enterprise support. This evolution has been strongly pushed by the
emergence of regional innovation system and triple helix-type concepts. While
the Czech Klastry programme developed out of industrial and enterprise policy,
its objectives are also being incorporated in the new National Innovation Plan.
In Korea the prior industrial complex model is ceding to a regional innovation
systems approach. Oregon’s policy approach has begun with an industrial focus
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in terms of major industries and cluster development generally, but the creation
of the Oregon Innovation Council’s mission will be to identify innovation
opportunities for the clusters involved in these other programmes.
Change for economic and other reasons. Over time, a number of countries have
changed the objectives and instruments used to promote regional specialisation
and clusters. The interesting question is whether these changes are due to
evolving needs, policy fads, lessons learned or another reason. Denmark was one
of the first countries to implement a programme to promote small business
networking in 1989. It later attempted to address the country’s mega clusters,
after several mapping studies, resulting in dialogues and numerous policy
measures to support them. When those actions were deemed too broad, the
country chose to support smaller clusters of competence, however the problem of
“picking winners” was raised. The national government then chose to change
strategies by giving regions the lead in cluster issues and focusing instead on
framework conditions and the promotion of linkages across relevant government
institutions and industry with a more notable innovation and technology focus
(see Box 2.3).
Specific challenges in economic performance or new directions in policy
can radically change the context for policy, making regional innovation
policies more or less relevant. For example, after several reports supported the
idea that France’s biggest competitiveness challenge was in growing high-
technology capabilities, the French government put in place the Pôles de
compétitivité initiative along with several other measures in rapid succession.
In the space of just a year, policies to promote innovation and clusters in
regions have become very prominent. As another older example, Germany’s
assessment of lagging performance in biotechnology led directly to the
BioRegio programme, the success of which has in turn led to a range of other
spatially focused innovation and cluster programmes in Germany. Georgia’s
strategy was in direct response to the state’s lagging economic performance
within the US and to an assessment that the state was falling behind in key
high-technology sectors.
Oregon (United States) is a particularly interesting case for considering
policy responses to economic changes over time. It too began with an
SME network programme, in fact modelled on Denmark’s programme.
Economic recovery efforts helped trigger a transition to a “key industries”
sectoral approach for the state’s economic development efforts. A number of
initiatives were developed around these sectors, including an accompanying
workforce development programme. By the mid 1990s, the cluster concept
simply became less prominent, although not as a direct result of any specific
evaluations of prior programmes. Attention merely shifted away from key
industries and clusters to other topics like rural development. This may have
been the result of the fact that the economy was doing well and there was a
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PART I
PART I
Chapter 3
71
I.3. HOW DO PROGRAMMES PICK PARTICIPANTS?
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Table 3.1. Targets and selection mechanisms of case study countries (cont.)
Primary
Programme/ Selection Selected
performance Target regions Target sectors Competitive?
policy mechanism (applied)
goal
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Table 3.1. Targets and selection mechanisms of case study countries (cont.)
Primary
Programme/ Selection Selected
performance Target regions Target sectors Competitive?
policy mechanism (applied)
goal
Sweden VINNVÄXT National Leading Leading Self selection Yes Round 1: 3 full
(high growth) and 7 partial
recipients
(25 selected out
of 150 for
planning grant)
Round 2:5 (23)
Visanu Regional All Priority Already No 30 (process
in regional identified in support
development regional growth recipients)
plan plan; selection
by dialogue
Regional Regional All Priority in Already No Round 1:
Cluster regional identified in 3 selected
programme development regional growth for projects,
plan plan; selection 7 for 1-year
by dialogue basic support
United DTI/RDA/DA National All Priority clusters Regions No n.a.
Kingdom defined organise
by region mapping studies
in regional or similar
economic (guidelines and
strategy support
provided by DTI)
United States, Georgia State-wide All sub-regions High technology Non-profit Yes, but Project
State Research containing or industry/ rolling by project basis
of Georgia Alliance partner university
university professionals
select projects
with greatest
potential positive
impact for state
United States, Oregon State-wide All sub-regions Largest sectors Identified via No n.a.
State Cluster in the economy, mapping study
of Oregon Industries potential for job
growth
Oregon State-wide All sub-regions All Self-selected No All accepted
Cluster to become
Network member
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Actors
Universities
Sectors TARGETS Spin -off firms
Dynamic All small firms
E xposed Foreign firms and investors
Strategic importance Consortia or partnerships
Social importance with differen t actors
fact, there are examples of programmes that end up serving different types of
actors across region types, as revealed in evaluations of programmes in
Finland and Japan, and the participation rates by different types of actors in
the numerous programmes.
A clear definition of the problem to be solved serves to define the
programme targets. Goals such as improving growth are not specific enough to
understand the real problem. Raising levels of GDP per capita can be achieved
by targeting high value added sectors but this does not necessarily create a
large number of jobs. Consequently, there are a number of tensions inherent
to choosing among the range of possible targets.
Leading versus. lagging regions. Programmes that have a primary objective of
increasing national economic growth will usually focus on the most prominent
drivers, which are leading regions and/or sectors. These prominent targets either
have the greatest potential to contribute to economic growth given their weight in
the economy as measured by jobs or output, or by their potential for higher rates
of productivity gain. This emphasis on motor regions or industries can also serve
to increase regional disparities by concentrating growth in specific areas of the
country. The original structure of the Pôles de compétitivité programme in France
assumed that national competitiveness requires some focusing of resources in
key areas with spillovers from growth poles to other regions. Critics argued that
the programme should, on the contrary, aim to promote growth directly in the
other regions and that resources should be divided accordingly. However,
allocating resources across too many clusters risks diluting the programme
impact. The debate about how the programme should be implemented brought
out clearly these different perspectives. Only a few of the programmes in the case
study countries seek specifically to support lagging regions to address issues of
regional disparities and social cohesion. Most national programmes have used EU
funding to target lagging regions and sectors.
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detailed explanation of these methods and their drawbacks. They are more
commonly used for programmes coming out of industrial policy as opposed to
science and technology programmes. Such studies seek to identify at a minimum
the largest statistical clusters, meaning those clusters that have the greatest
weight in the economy in general or in traded sectors. In some studies, a more
detailed competitiveness analysis is used to determine how promising the largest
clusters are in general and for the particular country. Spain’s Basque Country
Competitiveness programme, Finland’s National Cluster programme in the
late 1990s, and more recently the Czech Republic and Oregon Clusters Initiative
have all used the statistical concentration approach in their identification
process, at least as a first step.
The statistical cluster mapping studies indicate co-location, but follow-up
studies are needed to assess the actual linkages among actors. This information
is necessary to develop instruments most adapted to the cluster needs. Several
programmes have begun with this basic mapping for identification and then
elaborated on this. The Czech Republic, through the Klastry programme, has
followed up with the regions and completed over 40 additional mapping studies
that go into more depth. These more detailed studies are often part of a
programme’s initial phase in cluster development. The results of an analysis of
this kind in Sweden in 2003 were taken into consideration by some Swedish
agencies for their programmes in identifying clusters, but were complemented by
other sources of information. A similar but more elaborated approach was used
in the United Kingdom as described in Box 3.1. Several other programmes include
in their eligible expenses studies to better understand the cluster’s linkages.
Relying on a lower level of government. For a national policy, another strategy for
identifying programme targets is simply to rely on another level of government,
or decentralised central level government agents, to do so. As discussed later in
Chapter 5, this type of strategy also helps support policy coherence across levels
of government. For example, in Sweden the national government has required
that regional governments include cluster and innovation systems as part of their
regional growth programs (RTPs). Therefore, the regions, which have better
information on the regional economic situation, could help the national level
identify potential targets for their programmes. A similar strategy is used
in Germany by the GA-networking initiative. The Länder identify the most
prominent networks as part of their regional strategy for funding under the GA
programme. The Japanese Industrial Cluster programme relied on the national
ministry’s regional officers, in consultation with local and prefectural authorities,
to identify the most promising projects for consideration. In the United Kingdom,
the DTI provides guidance but the regions identify priority sectors or clusters and
determine the levels of support and types of instruments in accordance with
their broader Regional Economic Strategy (which is submitted to the DTI and
other central ministries for review and approval).
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The Italian Law 317, by contrast, was designed as a statistical model that set
out clear and very specific criteria for defining an industrial district type cluster
that a region may support. These criteria were based on the level of concentration
(in terms of employment and number firms) of a particular industry in a given
labour market area. This model could then be applied by any region in order to
define industrial districts that would then be eligible for support through a variety
of SME support measures. As the process of decentralisation advanced, Italian
regions gained responsibility for enterprise support and then a number of regions
either used their own formula or replicated that of the central government as a
means of selecting clusters.
Self-identification. Many programmes simply rely on cluster self-
identification, a bottom-up approach. In most cases the universe of potential
programme participants is delimited by certain eligibility criteria. Those
criteria may concern the number and type of actors required in the cluster
(including regional public support), geographical location or the scope of
projects or collaboration that can be funded. The challenge is ensuring that
the potential targets are made aware of the opportunity to self identify, such
as via a request for proposals.
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stakeholders. The Korean Innovative Cluster Cities selected are consistent with
the national industrial vision of strategic industries, the pilot locations selected
being the most promising. Finally, Japan’s two cluster programmes were both
top-down in the sense that the selection was led by officials of the central
ministries and followed the strategic lines set out in policy documents for
industry and science. However, in the case of the Japanese Industrial Clusters
programme, the top-down approach to a selection procedure was tempered by
a bottom-up element: regional level staff of METI made the selection.
Statistical methods versus negotiated approaches (or a combination of the two).
While some selection processes are based solely on statistical mapping, several
programmes have used the flexibility of a dialogue or negotiated process. The
statistical selection is based on objective criteria less subject to political
influence but it can miss clusters important for other reasons. Programmes
based on a mapping include the former Finland National Cluster programme
and the Oregon Cluster Industries approach, in both cases seeking to target the
largest sectors. Several programmes used a combination of a preliminary
cluster identification followed by a dialogue for a final selection so as to
preserve some flexibility and ensure participant motivation. After Spain’s
Basque Country competitiveness assessment, the region promoted a public/
private dialogue to select the pool of initially eligible sectors. Interestingly, that
dialogue gave a list that was different from the Porter-inspired competitiveness
exercise, albeit there were some areas of overlap. It was then up to the firms
themselves to decide if they would go forward as a formal cluster. One identified
cluster had even declined to participate in the beginning of the programme but
later chose to join. Since that first selection round in the early 1990s, other
clusters have self-identified to authorities and, if convincing, have became part
of the cluster programme.
Sweden and Montreal have also used this dialogue/negotiation process in
cluster selection. The Visanu and Regional Cluster programmes in Sweden used a
dialogue method to select participating clusters, but did not rely solely on those
clusters already prioritised in regional growth plans or identified by a statistical
mapping. The process was also used to adjust for the complexity of large urban
areas, which made it more difficult for projects in the Stockholm and West Gotia
regions to be selected under VINNVÄXT given the importance of regional
consensus on priority sectors to the selection process. A recent process in
Montreal, a city with strong industrial specialisations in aeronautics and
pharmaceuticals, took the form of a cluster audit (Box 3.2). The city was looking
to establish a more comprehensive cluster development strategy to take into
account different categories of existing clusters as well as to identify new
opportunities. On the basis of the statistical analysis of established and emerging
clusters, the metropolitan authority (CMM) worked with a range of actors to
develop a consensus around the main priorities for resource allocation.
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PART I
Chapter 4
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Canada NRC Technology Innovation (collaborative EUR 342 million over first Approximate range from Yes (may be
Cluster R&D, specialised R&D 5 years (includes three EUR 1.2 to 8.4 million national
Initiatives services and five-year funding rounds) or provincial
infrastructure, industry sources)
development)
Czech Klastry Engagement of actors EUR 12 million Part I: finding partners Increasing
Republic (cluster facilitator over three years (EUR 7 000-35 000); from 25%
trainings, supporting Part II activities to 75% over
cluster initiative (100 000 to 1.6 million) the three years
formation, incentive
to incorporate at least one
university)
Finland Centres Entrepreneurship and 1999-2005 totalled From EUR 150 000 to 50% regional
of Expertise innovation (collaborative EUR 46 million 900 000 per CoE (overall government
R&D, business services (approximately average approx. 400 000)
to existing and start-up EUR 8 million 2003,
SMEs) EUR 9.4 million 2004)
National Cluster Innovation (collaborate More than EUR Approximately n.a.
programme R&D) 100 million over two EUR 4-6 million
to three years
France Pôles Innovation (collaborative EUR 1.5 billion over Approximate estimated Yes
de compétitivité R&D); engagement three years average 26.7 million
of actors (development for international clusters,
of cluster initiative) 1.9 million for regional
Local Production Engagement of actors Not available (< 3 million < EUR 40 000 Yes
Systems (SPL) (supporting cluster thus far)
initiative formation
and joint activities)
Germany BioRegio Innovation (collaborative EUR 95 million with Approx. EUR 2 million n.a.
R&D) preferential access direct programme funding
to other funding totalling per region for top 4;
EUR 700 million others significantly less
InnoRegio Innovation (collaborative EUR 110 million n.a. 40% of total
R&D) spending
combined was
private
GA-network Engagement of actors n.a. Max 300 000 over 70% public,
initiative (supporting cluster 3 years; up to 500 000 for 30% other
(Joint Task) initiative formation) project with more than
5 partners. Public funding
up to 70% of eligible costs
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Categories of instruments
In general, the instruments used by programmes in the case studies are
of three distinct types: 1) to engage actors; 2) to develop collective services;
and 3) to support collaborative R&D. A basic overview of these instruments by
category is found in Table 4.2. Engaging actors is frequently a prerequisite for
participating in collective services or as a component of a collaborative R&D
project. One review of clusters has identified three critical success factors
Engage actors
Identify clusters ● Conduct mapping studies of clusters (quantitative and qualitative)
● Use facilitators and other brokers to identify firms that could work
together
Support networks/ clusters ● Host awareness raising events (conferences, cluster education)
● Offer financial incentives for firm networking organisations
● Sponsor firm networking activities
● Benchmark performance
● Map cluster relationships
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for cluster development that instruments could focus on: networks and
partnerships, strong skills base and innovation and R&D capacity (DTI, 2004).
Beyond these broad success factors, the need for instruments can vary across
different cluster forms, stages of the cluster lifecycle, etc. A discussion of
public strategies for a more cluster-friendly environment is found later in the
next chapter on governance. The budgets and timeframe of the programmes
vary greatly according to which of these types of instruments are used.
Engaging actors
Programmes that use instruments to engage actors are generally
appropriate for all contexts. Building networks and partnerships (i.e., interaction
among firms, between firms and other actors) may be an end in and of itself;
however several programmes that have focused exclusively on building networks
alone have not proven durable. These initiatives may also be focused either on
internal linkages within the cluster or external linkages between the cluster and
other actors or regions. The goal of these instruments is not only to bring actors
together but to get them organised around key issues by industry or a common
theme that cuts across several industries. The private actor motivations need to
be carefully assessed as many programmes in OECD countries have been
evaluated as having too strong a public role and not a sufficiently active private
role in these engagement relationships. This section will discuss several
important issues in building these linkages, such as the importance of
facilitators, the forms of cluster initiatives, the spatial area to be served, the level
of engagement desired and the instruments to develop common goals.
Importance of facilitators. The role of the facilitators in engaging
actors predates the mass popularity of clusters in public policy in the 1990s.
Facilitation is either part of the budget of the programme generally or an eligible
expense within approved projects. The nature of facilitation can differ based on
the types of actors, the ease of identification of actors, and the goals for working
together. At its most basic form of facilitation, an animator is employed to bring
firms together for informational or social events. For example, in one of its
earliest cluster initiatives, the United Kingdom’s DTI sponsored a facilitator for
the Biotech sector in and around London. This led to BioWednesday events,
attracting several hundred participants, which were credited with raising the
level of interaction among the region’s biotech companies. Taking the
facilitation role further, Scottish Enterprise also emphasised network building
through the use of a range of events and meetings organised by a facilitator who
visited firms and built interest in the idea of a network of common interest
among firms in the region. Italy has a long tradition of supporting facilitators in
their industrial districts targeting SMEs. Perhaps one difference between the
Italian situation and that of the United Kingdom and many other countries is
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that many of the social ties on which co-operation were based were strongly
embedded in Italy whereas they were often underdeveloped in other countries.
Denmark’s Network programme had an active approach to recruiting and
training facilitators that was replicated around the world. The Danish programme
trained brokers, including the development of a broker certification system, as
well as used other “scouts” to identify opportunities for joint activities (see
Box 4.1). Many US states replicated this approach in the early 1990s, especially for
rural areas, such as North Carolina, Arkansas and Oregon (Rosenfeld, 2001). The
concept of facilitator training and certification continues to be used today,
including in the latest Oregon programme and the Czech Klastry programme.
Forms of cluster initiatives. The organisations that manage the cluster
initiatives take a variety of forms. The main variants include: 1) non-profit
associations; 2) university or similar nominated agents; and 3) public agencies.
They typically take the form of a non-profit association when the goal is to
have a separate legal status, such as in France or Spain’s Basque Country.
Other strategies have used a university representative or local government
representative as the recipient and manager of programme funds, such as in
Phase 1 of the Czech Klastry programme. In Germany, the clusters and networks
of its different programmes are also managed by an independent association or
consortium, rather than a firm or public authority. In the GA-networking
initiative, these associations must include at least three types of partners, one
of which must be a commercial enterprise. Italy also relied on consortia of
firms, a legally defined concept. The cluster facilitators in Sweden’s Visanu
programme were a mix of public and private actors.
Spatial configuration of actors. The spatial configuration of the targeted actors
is an important factor in trying to engage them. If the participants are in close
proximity, instruments for regular informal gatherings like the BioWednesday
example are possible. If the actors are located in different countries not in
immediate proximity, the instruments to develop networks need to account for
this distance. Japan’s two programmes offer an interesting contrast in terms
of strategies for building networks. The Knowledge Clusters are based on a
university as the hub; therefore the instruments best serve clusters that are
geographically concentrated in an urban area. The Japanese Industrial Clusters
are based on presence of firms in a particular administrative region, but they do
not necessarily share a geographic hub and are more dispersed. The Korean
Innovative Cluster Cities have industrial complexes that serve as the focal point
for instruments. In France, the wide distances between cluster members were
making the programmatically required meetings among firms problematic,
which resulted in a change in programme requirements. According to the Global
Cluster Initiative Survey 2003, 50% of the 238 surveyed cluster initiatives have
most of their members within one hour driving distance (Sölvell et al., 2003).1
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Collective services
Once the actors have agreed to work together, their common interests
dictate the nature of collective services to support participants. Collective
services involve a significant degree of consensus and require active firm
participation. It is of course more difficult to evaluate the outcomes of
collective services than those targeted at single enterprises. This section will
discuss the common instruments to promote internal and external (including
FDI and exports) business linkages, provision of services through collective
service centres and instruments related to skill development.
Business linkages. For decades, horizontal SME networking programmes
have used very practical instruments to meet specific business needs. These
instruments include the strategic plans and studies described above, as well as
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Common objectives
Rare objectives
Note: GCIS is the Global Cluster Initiative Survey.
Source: Sölvell et al. (2003), The Cluster Initiative Greenbook, Ivory Tower AB, Stockholm, Sweden.
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nature or excessive transaction costs for private providers, these services are
not always readily available for purchase in the market by SMEs, thereby
necessitating public intervention. Within Italy, there has been a development
since the early 1980s on a grass roots level for such service centres. For
example, the ERVET centre in Emilia Romagna along with many craft and
industry associations have provided these “real services” such as market
information, testing and export support. Given their different areas of focus,
many of which are designed to support a particular local cluster, they take
purely public, purely private and mixed public-private forms. Spain is another
country which has taken advantage of this model for publicly provided
collective services in the form of technology and business development
centres. Beyond services, programmes to support clusters can also meet
specific collective needs. For example, in the northwest of England, there are
a number of biomedical start-up companies, clinical trial companies and large
teaching hospitals.
Human resource development. Although a strong skill base is frequently cited
as a critical cluster success factor and a key determinant for firm location,
the programmes studied did not typically emphasise human resource
development. This result is perhaps due in part to the fact that most education
and training programmes are often viewed as framework conditions. They are
also sponsored by different agencies and ministries and can not always be
easily aligned with the particular needs of a cluster in one region. The Georgia
Research Alliance is unique among the sample as placing a strong accent on the
attraction of world-class researchers and the attraction and training of highly
skilled graduate students. Canada’s NRC Technology Cluster Initiatives also
place a strong accent on highly skilled human resources.
Nevertheless, clusters in several programmes did support training or took
the opportunity to collaborate with a local educational institution on skill
development. Traditionally, the SME-support type programmes have offered
training programmes to serve collectively the training needs of SME employees
through a cluster skill centre for both technical and managerial skills. There are
also attempts to help train future employees for a cluster. In France, for
example, one of the SPL programme clusters worked with a local high school to
develop a targeted vocational education training programme in plastics. In
Sweden’s Visanu programme, although skill development was not a focus for
financing, more than 40% of the participating clusters used part of the financing
for education or competence development (e.g., new university programs,
competence centres, and seminars or workshops on specific topics). A few of
the Innovative Cluster Cities in Korea have listed skill development as part of
their plan, with resources going in part to construction. These are just a few of
the examples across OECD countries.
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Collaborative R&D
Some cluster policies are clearly positioned so as to build linkages
between research and business. These programmes are part of the general
shift in R&D policy towards multi-actor and multi-sector projects with an
emphasis on innovation and commercialisation potential. Often the
programmes seek to address specific weaknesses in the country’s innovation
results. The nature of these initiatives span from “light” or one-off joint R&D
projects to capital intensive “heavy” collaborative R&D programmes in key
national industries. This section will discuss the common instruments used in
programmes to support collaborative R&D, the networking of these actors,
commercialisation of results and entrepreneurship instruments to support
spin-offs and new firms.
Addressing weaknesses. Many of the instruments to promote innovation
are designed to overcome clearly identified weaknesses in national innovation
systems and performance. For example France’s assessment revealed that
R&D is too heavily dominated by the public sector, resulting in a lack of
market orientation. German initiatives in this field are expected to address a
perceived lack of effective co-operation between industry and the research/
university sector and insufficiently co-ordinated research support activities.
Italy’s recent regional innovation initiatives are part of a more general
response to concern among policy makers that Italy tends to be behind
other advanced European nations with respect to some key indicators of
performance in the field of R&D and innovation. For example, business R&D
expenditures, tertiary and continuing education rates, EU and international
patenting, and other indicators are lower than the EU average.2 In Sweden,
concern over the so-called Swedish paradox of high R&D expenditure but low
levels of commercialisation is a key factor in regional innovation and cluster
policies. In each case, an emphasis on building synergies has emerged.
Building networks and platforms. Given the importance of engaging actors
in the context of these joint research projects, most programmes involve
instruments to that effect. For example, in Sweden’s VINNVÄXT programme,
at least 50% of eligible expenses had to be spent on R&D but other eligible
expenses included process management, brand creation, organisation and
strategic work. In Finland’s National Cluster programme, which was primarily
collaborative R&D, 25% of funds were spent on cluster governance. France’s
Pôles de compétitivité requires new formal structures as a key element of the
programme. Nevertheless, many cluster programmes are not always linked to
existing research platforms.
In some cases, these platforms and networks are promoted through
research parks, industrial complexes and other vehicles. There have been
mixed results regarding the effectiveness and efficiency of such tools to
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Metropolitan areas These regions need to revitalise diverse Innovation process near
clusters with strong existing capacity commercialisation, often with large firms
Science-technology-centred Industrialisation of technology with Technology transfer, business incubation,
clusters a central role for high-level universities and greater investment in R&D (the latter
and research institutes resulting in a greater time lag between
support and economic impact)
Niche clusters Smaller regional agglomerations Supporting existing networks, albeit
with some cluster practices present for niche fields with limited market share
and some niche activities
Network formation between Industrial agglomeration is thin Network formation among small scale
mini-clusters and there are no broad-based clusters clusters that need time to develop
Source: Ministry of Economy, Trade and Industry (METI) (2005), “Report on Industrial Cluster
Programme”, evaluation report submitted to METI by the Industrial Cluster Study Group.
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Engaging actors. The timeframe for organising cluster initiatives and other
networking mechanisms need not be as long as R&D-intensive programmes,
but they do need several years. The programmes in the case study countries
that focus on building networks typically last between three to five years.
Some programmes have such an initial grant cycle but appreciate that there
are changing needs over time which is met by programme renewals or the
development of another programme to build on this first stage. Examples of
both instances are found in the case studies. The Japanese Industrial Cluster
approach has a long-term vision with an “evolutionary” plan with regards to
cluster progress. While there are a limited number of evaluations of the
effectiveness of such programmes to launch long-term networks, evidence
does suggest that even a three-year timeframe is not always sufficient. The
CzechInvest study also found that a period less than three years is unlikely to
be sufficient to allow the cluster to stand alone, and that four years would be
a more realistic minimum programme period.
Funding category 1: forming partnerships. The first category of spending is a
small investment to launch a cluster initiative. These amounts are less than
EUR 100 000 per year per cluster (often less than EUR 50 000) and last only a
few years. Examples of this type are the SPL programme in France, Part 1
funding of the Czech Klastry programme, and Sweden’s Visanu programme.
Funding category 2: “light” R&D and collective services. A second category of
hybrid spending includes supporting cluster collaborative projects, sometimes
with “light” R&D. This spending category ranges from between EUR 100 000 to
approximately 1 million. The Basque Country’s Competitiveness Program falls
into this category, although since the cluster initiatives have been in existence for
several years they now access funding from other programmes to support many
collaborative R&D projects. The Czech Republic’s Klastry programme Phase 2 and
Germany’s InnoRegio also support collaborative projects in this spending range.
The Finnish and Norwegian Centres of Expertise investment are other mid-range
spending programmes.
Category 3: “heavy” R&D investment. A third category is for “heavy” R&D
investment. These projects receive around EUR 1 million or more for a sustained
period of time or several million per year but for a more limited timeframe. The
Finnish National Cluster programme allocated several million to each cluster but
only for 2-3 years as an initial period. It was then up to the sectoral ministries
to decide how to allocate their increased R&D budget, and some ministries
continued to support clusters. BioRegio and VINNVÄXT are examples of
sustained long-term investments of EUR 2 million and 800 000 respectively per
year. The calculations for the French Pôles de compétitivité, with a very high
estimated spending per cluster for international clusters, should be interpreted
with caution as the total budget of EUR 1.5 billion is an upper bound based on
allocations from a range of ministries and agencies and a number of programme
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decisions are still being finalised. Korea’s spending per cluster is also very high
relative to other programmes. This is in part because some of the funding goes to
infrastructure investments.
Multiple goals of programme co-financing from different sources. The matching
funds requirements of many national programmes serve several important
goals. A private sector matching requirement helps test that participants are
motivated and are willing to contribute their own funds. It also serves to
reduce moral hazard, for if private funds are involved, participants are more
likely to act efficiently than if it is a pure grant. Sometimes that private
sector contribution is measured in terms of in-kind resources. A co-funding
requirement from another level of government also serves to promote policy
coherence. In all cases, the matching serves to leverage additional funds to
increase the impact of the programme seed funding. In one example from the
French SPL programme, the leverage effect of national public funds was one to
40. Across the Georgia Research Alliance programmes, the leverage effect is
reported to be one to five, as the investment of USD 400 million in state funds
yielded an additional USD 1 billion in federal government research dollars and
USD 1 billion in private resources.
The programmes focused on grant funding and typically did not have
explicit links with access to other forms of financing. France is one example that
has included other types of financing from the start. Of the up to EUR 1.5 billion
for the programme, several EUR hundred million will come in the form of loans,
guarantees or equity investments from either the OSEO Financing Agency (SME
and innovation financing entity) or the CDC, a quasi public bank that provides
financing in the context of programmes with a public interest. While the goal of
the labeling effect should help leverage private funds beyond basic programme
requirements, that information was not available in most case studies.
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main project that lasts typically around two years. The Centres of Expertise
programme is designed to select already functioning clusters that seek to
increase the level of R&D collaboration and to internationalise. The competitive
selection and longer-term funding (ten-year cycles) are the conditions for the
programme to which the best Arena networks may seek to graduate (see
Figure 4.2). Oregon’s Cluster Network seeks to support all clusters interested in
development. OregonInC, a separate organisation, will develop programmes to
serve those that have been identified as successful. Within Sweden, the Visanu
programme targeted many of the initiatives that did not get funding under
VINNVÄXT. Further, the latest programme, the Regional Cluster programme,
seeks to direct at least 80% of funding to former Visanu participants, and in the
first round of funding all the winners had participated previously in Visanu.
Given that a potential drawback to the pipeline approach is the exclusion of new
promising clusters, keeping the programme open to candidates that were not in
the pipeline is a consideration.
NCE
Arena
Maturity of collaboration
Across successive funding rounds of the same programme, the goals may
be complementary. For example, VINNVÄXT had funded in the first two rounds
the most promising clusters/projects. The third round is focusing on more
embryonic clusters. Both the Japanese and Korean programmes view their
programmes in a longer-term timeframe with distinct phases. For example, the
National Plan for Balanced Development views the innovation programmes in
three stages of five years: 1) set up innovation systems; 2) move into the world
class innovative cluster; and 3) enhance the regional innovation system. An
evaluation of Japan’s industrial clusters also proposed three five-year stages for
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Notes
1. The Global Cluster Initiative Survey 2003 identified more than 500 cluster
initiatives, of which 238 responded. The sample bias is towards more formalised
and English language cluster initiatives. For more details on this study, please
see Sölvell et al. (2003).
2. At the same time, the Italian economy has some features that explain at least some
of these results. In particular, the economy is marked by a predominance of small
manufacturing enterprises and a lack of large, technology-based enterprises, which
tends to depress business R&D statistics, reduce the number of patents applied for
and influence the type of innovation (i.e., incremental process innovation rather
than technology-based innovation).
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OECD Reviews of Regional Innovation
Competitive Regional Clusters
© OECD 2007
PART I
PART I
Chapter 5
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I.5. WHO DOES WHAT? GOVERNANCE
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Canada NRC Federal Initiate, fund, National Research Council No pre-set role Participate
Technology implement, but in most cases
Cluster monitor partial co-funding
Initiatives
Czech Klastry Centralised Initiate, fund, CzechInvest (Investment Orient regional Apply for funding,
Republic unitary monitor and and Business Development approach to participate
implement policy, Agency, under Ministry identify and
capacity building of Industry and Trade) support selected
for regions clusters
Finland Centres Decentralised Initiate, co-fund Ministry of Interior, Co-fund Apply for funding,
of Expertise unitary Department for the participate
Development of Regions
(with inter-ministerial
committee)
National Decentralised Initiate, fund and Individual sectoral None Participate
Cluster unitary implement ministries
programme
France Pôles de Regionalised Initiate, partial Inter-ministerial delegation Support Apply for funding,
compétitivité unitary funding, for regional planning and applications, lead cluster
implement competitiveness (DIACT), partial funding initiative
joint with Ministry (with public
of the Economy, Finance participants)
and Industry
Local Regionalised Initiate, partial Inter-ministerial delegation Increasingly Apply for funding;
Production unitary funding, for regional planning and involved in partial lead cluster
Systems implement competitiveness (DIACT) funding activities
(SPL)
Germany BioRegio Federal Initiate, fund Federal Ministry Co-fund and Apply for funding,
for Education implement participate
and Research (BMWA)
InnoRegio Federal Initiate, fund Federal Ministry Co-fund and Apply for funding,
for Education implement participate
and Research (BMWA)
GA-network Federal Initiate, joint Ministry of Economy, Support n.a.
initiative selection Länder applications;
(Joint Task) and funding joint selection
and funding
Italy Law 317(91) Regionalised Initiate through None, Ministry Adapt, fund Depends
unitary framework of Productive Activities and implement on regional
conditions for promoted the law programme
regional decision
Technological Regionalised Initiate and fund Ministry for Education Lead implementer Co-fund projects
Districts unitary and Research
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Japan MEXT Centralised Initiate, fund Ministry of Education, No set role Participate
Knowledge unitary and implement Culture, Sports, Science (public sector
Clusters and Technology (MEXT) led)
METI Centralised Initiate, fund Ministry of Economy, Trade No set role Participate
Industrial unitary and implement and Industry (METI)
Clusters
Korea Innovative Centralised Initiate, fund Korea Industrial Complex No set role Participate
Cluster Cities unitary and implement Corporation (under
the Ministry of Commerce,
Industry and Energy)
Netherlands Peaks Decentralised Initiate, fund Ministry of Economic Identify clusters Participate
in the Delta unitary Affairs and other areas
for support,
potentially
co-fund,
involvement
of development
agencies
Innovation Decentralised Initiate, co-fund Ministry of Economic Not directly Active role
Key Areas unitary and implement Affairs/ SenterNovem involved in strategy setting
(via cluster Agency and financing
initiatives)
Norway Arena Decentralised Initiate, funding, Joint agreement three Include in Apply for funding
programme unitary implement agencies: Innovation regional and local
Norway, SIVA (Industrial development
Development Corp.) plans; possibly
under the Ministry of Trade co-fund
and Industry + Research (but more
Council under the Ministry “bottom-up”
of Education and Research than Centres)
Centres Decentralised Initiate, matching Joint agreement three Include Apply for funding;
of Expertise unitary funding, agencies (request in regional lead cluster
(NCE) implement of Ministry of Local and local initiative
Government and Regional development
Development) plans; co-fund
Spain; Competitive- Regionalised Not a national Basque Regional Initiate, fund, Apply for funding;
Basque ness clusters unitary policy Government, Department implement lead cluster
Country of Industry, Commerce initiative
and Tourism
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Sweden VINNVÄXT Decentralised Initiate, matching VINNOVA (Swedish Agency Matching funding Apply for funding;
unitary funding, for Innovation Systems, participate
implement under the Ministry
of Education, Research
and Culture)
Visanu Decentralised Initiate, matching Nutek (Swedish Agency Support Apply for funding;
unitary funding, for Economic and Regional applicants participate
implement Growth) joint in regional
with VINNOVA (Innovation growth plan,
Systems) and Invest matching funding
in Sweden Agency.
They depend on
the Ministries of Industry,
Foreign Affairs and
Education respectively)
Regional Decentralised Initiate, matching Nutek (Swedish Agency Support Apply for funding;
Cluster unitary funding, for Economic and Regional applicants participate
programme implement Growth) in regional
growth plan,
matching funding
United DTI/RDA/DA Centralised Facilitate, fund Department of Trade and Work with RDAs Participate
Kingdom cluster unitary (with Industry; Regional to develop cluster on RDA board
initiatives 3 devolved Development Agencies initiatives
governments) (RDAs); Devolved within regional
Administrations (DAs) economic
strategies, some
co-funding
United States, Georgia Federal Not a national Georgia Research Alliance Partial funding Initiate, partial
State Research policy; indirect (non-profit organisation funding,
of Georgia Alliance support via of business leaders implement
co-financing and universities)
of R&D
and commer-
cialisation
United States, Oregon Federal Not a national State of Oregon Economic Initiate, fund, Participate
State Cluster policy and Community implement
of Oregon Industries Development Department
Oregon Federal Not a national State of Oregon Economic Initiate, fund, Request
Cluster policy and Community implement to participate
Network Development Department
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increase the leverage effect of national funding and to ensure regional support.
In France, the regions helped to submit the proposals as well as pledge
co-financing for the Pôles de compétitivité programme.
Contracts and other funding agreements for national/regional policy
articulation are another vehicle for supporting policy coherence with respect to
clusters. In Germany, the GA joint taskforce has incorporated finance for
co-operation and cluster management within the wider framework of negotiated
funding agreements between the Federal and Länder governments. France has
used a similar vehicle. The latest round of the French seven-year Contrat Plan Etat
Region explicitly prioritises funding for projects that support the clusters selected
by either the national pôles or SPL programmes. These joint plans specify
important regional initiatives and the respective financial obligations of the
national and regional governments.
Frameworks, the enabling environment and cluster-informed policies. A number
of countries that cultivated successful clusters, like Ireland, did so without a
national cluster programme. Rather, the framework conditions and indirect
financing did actively support successful clusters. In Ireland, the very active
FDI attraction strategy played a major role in the development of the ICT
cluster. The policy served to bring in computer assembly plants of multi-
national computer companies. From that public-supported start, the ICT
cluster grew to include spin-offs and software makers. The most recent
strategy is now much more focused on strengthening these locally grown
businesses and downplays the inward investment dimension, partly because
the cluster now seems to be established and is somewhat less dependent on
multinationals.
The experience of Scotland’s so-called “Silicon Glen” is another example of
coming to a cluster approach via an inward investment strategy. Over the course
of the 1970s and 1980s, several high-technology companies located in Scotland,
among them IBM, Hewlett Packard, Motorola, NEC and Compaq. These
companies created large numbers of jobs and the inward investment strategy was
successful in moving Scotland away from reliance on declining heavy industries.
By 1990, electronics manufacturing accounted for 20% of all manufacturing and
42% of exports. This policy was supported through large-scale incentives with
electronics manufacturers in Scotland receiving half of the available regional
selective assistance grants over the period 1995-99. Nonetheless, the linkage
between foreign-owned firms did not live up to expectations. For example, locally
sourced inputs were only a very small proportion of total inputs. Moreover, the
local input tended to be mainly at the low-technology end, such as packaging,
plastics, rubber and metal components. Signs that the local linkages were not
likely to increase, but if anything more prone to decrease, along with the
increasing difficulty of attracting new investors, led Scotland’s development
agency Scottish Enterprise to rethink its strategy. They chose to embark on a new
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spawned the Oregon Cluster Network, which serves to support all groups that are
or seek to become a cluster initiative. The newly created Oregon InC (the Oregon
Innovation Council) is a public/private team to identify Oregon’s innovation-
driven growth opportunities, maximise the state’s competitive advantages and
establish Oregon’s niche in the global economy. They have been meeting with
numerous clusters in an effort to recommend public programmes that will
best meet the state’s economic goals. The Oregon Economic and Community
Development Department is also undergoing organisational restructuring around
the idea of clusters.
Regional government capacity. The strength of regional governments within
the governance system is an important consideration when national
governments seek to work with regions, particularly in unitary countries.
Depending on the level of centralisation, the regions may range from mere
administrative divisions to appropriately skilled units of government. When a
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Organise service delivery around ● Aggregate, collect and sort information by cluster
clusters ● Form cross-agency quick response teams
● Encourage and support multi-firm activity
● Build incentives for multi-firm applications to funding programmes
Target investments to clusters ● Invest in cluster R&D and innovation
● Invest in cluster technology centres or parks
● Support cluster entrepreneurial activity
● Market clusters and build cluster markets
Strengthen networking and build ● Establish or recognise cluster organisations and alliances
bridges ● Facilitate external linkages
● Encourage cluster communications channels
Develop human resources for clusters ● Develop a skilled and specialised labour force
● Engage community-based employment intermediaries
● Qualify people for cluster employment
● Establish cluster skills centres
● Support regional skill alliances
Source: National Governor’s Association (NGA) (2001), National Governor’s Guide to Cluster-Based Economic
Development, Washington, DC.
region does not have the budget or instruments to promote regional economic
development issues, their ability to select clusters for national programmes
can have limitations. In Sweden, for example, regional governance became an
issue in the identification of clusters to be supported by national programmes.
In larger regions, where there exists a portfolio of clusters and a lack of
consensus regarding the priorities, it is harder for the national programmes to
take advantage of regional plans.
A benefit of the national/regional government collaboration is capacity
building for regional governments with respect to cluster development. The
Czech Klastry programme is administered by the national agency CzechInvest
but has an explicit goal of building regional capacity. The regions are becoming
involved in the mapping process for identifying and understanding their clusters.
They also benefit from trainings and conferences. In France, the Pôles de
compétitivité programme, and to a lesser extent the much smaller SPL programme,
are both helping the regions learn how to build their economic strategies in
support of the cluster approach. While this was not an explicit goal of the
programmes at onset, the positive results in this area have become evident.
New public actor relationships. Another benefit of these programmes is that
different units of government that do not normally work together are doing so.
In France, one of the interesting results of the Pôles de compétitivité programme
was the fact that a range of sub-national entities worked together. Since the
spatial configuration of the clusters often cut across several sub-national
administrative barriers, those actors came to the table in support of a cluster
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private sector interest, there are interesting alternatives. For example, the
programme of Spain’s Basque Country did begin with a pre-selection of priority
sectors but ultimately gave the private sector the choice of participating or not.
This required private sector initiative helps explain why the groups are still
working together and conducting projects through this or other public
programmes ten years later. The financial contribution of the private sector in the
programme design also serves as a selection mechanism because if the private
sector is not willing to pay at least in part for a service, it is much less likely that
these firms would continue to work together after programme funding ends.
Long-term approach. The cultivation of long-term relationships is not easily
achieved in the short-term or in a pure project based approach. The existence of
on-going relationships beyond the programme funding period can be
considered a sign of success. For the programmes in the case studies that have
terminated, such as Denmark’s SME networking or Finland’s National Cluster
programme, there are mixed results with regards to clusters or networks
continuing to operate actively. Even the programmes supporting collaborative
R&D do try to construct platforms that will serve beyond the particular research
project. One of the common thoughts is that the programme period is too short
to achieve these long-term goals.
Transaction costs. High transaction costs for the programme can discourage
private sector participation. For example, the French Pôles de compétitivité
programme involves funding from five ministries and four agencies or banks.
Given the large number of different pots of money available for the programme
and the paperwork burden required of each separate funding application, the
participating clusters complained. One prominent cluster initiative was quoted
in newspapers as indicating that the transactions costs were starting to exceed
the programme benefits. The national government responded to these critiques
by developing a one-stop shop for fund applications to the ministries providing
funding. Transaction costs were also high in terms of cluster governance. As
required by the programme, clusters had to register as a not-for profit entity
with a number of different oversight committees. Given the time commitment
required of cluster members and the delays that these various committees
entailed, the national government also changed the programme requirements
to allow for more flexibility in formal cluster governance to render them
more efficient.
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PART I
Chapter 6
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Performance
• Competitiveness
• Growth
• Goal fulfilment
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increases the programme’s impact. The Georgia Research Alliance, whose goal
was to increase the economic performance for the state via technology,
reports to have achieved a five to one leverage, attracting USD 1 billion in
federal research dollars and USD 1 billion in private investment for the state’s
total investment of USD 400 million. The French SPL programme for small
firms sought specifically to serve as a base funding for small firm consortia to
use to attract additional funds, and in one exceptional case this was a 40 to
one ratio. Visanu’s programme funding requirements were 50% national
government and 50% regional government. One study found that the total
funding included 23% private financing, albeit usually in time as opposed to
money, and more regional than national funding.
One of the explicit, if not implicit, goals of national programmes is to
improve the public sector’s approach to innovation and clusters. The Czech
National Innovation Plan seeks to increase involvement of regional public actors
in support of clusters and regional innovation systems. This is one of the
anticipated measures of success for the next round of the Klastry programme. An
evaluation of the Finnish National Cluster Programme revealed that one of the
key findings was co-ordination across public sector agencies that fund research.
Policy learning. While not every programme has a formalised post-
programme evaluation, there are examples of policy learning. The mechanisms
for this are both informal and formal, including pilot programmes and special
“learning” components. The challenge is not only to improve an existing
programme, but to capture that knowledge for the development of future
programmes. For example, there are countries that have changed policies over
time or are re-introducing similar policies but the lessons learned from the last
rounds are not known.
Informal participant feedback has proven useful in the development of the
Pôles de compétitivité programme in France. Given the high profile nature of the
programme as well as the stature of some of the large firms participating, firms
have provided feedback on the programme. In some cases this feedback is
highly public and in national newspapers. Some of the changes made to the
programme to respond to these comments include somewhat less onerous
cluster governance requirements and a certain level of simplification regarding
the funding mechanisms.
Countries are also using pilot programmes to promote policy learning
with regards to clusters and innovation systems. Norway actually ran a pilot
programme of its Centres of Expertise before having the first official call for
proposals. Participants in the pilot programme then had to compete in the
official round. While Korea’s Innovative Cluster Cities is a major national
investment and could not be considered merely a pilot project, the lessons
learned from this programme will serve to inform the programmes to be
implemented in all industrial complexes in the future.
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Lessons learned
Appropriateness of a cluster policy
This first set of lessons learned concerns the degree to which these
programmes are appropriate, realistic and flexible enough to achieve their
goals. Given the popularity of the cluster approach, there is concern that it is
being used as the core strategy to achieve competitiveness, yet the two are not
merely interchangeable. After an analysis regarding why a cluster policy is
helpful and to whom it should be addressed, the appropriate programme
design question becomes relevant. The wide variety of cluster types, cluster
stages and regional conditions complicates these design efforts but flexibility
in solutions is possible.
Identify explicitly what the national level’s interests are, what the
barriers to achieving those goals are, and how a cluster approach can help
overcome these problems.
Often governments launch programmes to enhance competitiveness or
build innovation capacity yet these objectives are very broad. Such goals do
not specify the nature of the problem that the national level needs to address
and hence why programmes to promote clusters, as opposed to other tools,
would be the most effective option. This lack of clarity also limits the ability to
target, fund and evaluate outcomes.
Germany’s BioRegio was perhaps the most focused of all the policies
studied, as it was designed to support one sector and therefore much less
comprehensive than some other programmes. Nevertheless, the clarity of
motivations for national level intervention, the straightforward goals for this
programme and the focused public support contributed to its success.
Weigh the relative merits of active intervention from the national
government versus framework conditions and facilitation.
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Policy coherence
Achieving policy coherence across sectors and across levels of government
is a perennial challenge in supporting regional development. In the case of
supporting regional specialisation, there are a multitude of programmes from at
least three different policy families all working towards potentially similar
goals. The fragmentation of resources across these different programmes is
confusing to both public and private actors. At best, the programmes are simply
co-existing but with potential increased transactions costs for the participants.
At worst, the programmes actually divide actors that should otherwise be
working together, such as when administrative boundaries don’t map to the
clusters or certain relevant actors are not eligible for support in the context of
the programme.
Determine a cross-ministerial strategy for national level intervention.
Clear objective setting and planning at the central level can help to align
different actions and serves to promote coherence across regions. The
proliferation of cluster-type approaches at the central level, in addition to sub-
national programmes, necessitates a clear programme mapping to prevent
duplication, fill gaps and avoid missed opportunities. While different central
level agencies and ministries have sought to collaborate in some countries,
high-level support strengthens the motivations for such collaboration and
raises the level of the programme on national agendas.
There exist interesting examples of either clear strategies or cross-
ministerial efforts in support of a plan. France’s Pôles de compétitivité and the
Korean Innovative Cluster Cities are both highly prominent in their respective
countries and therefore assemble key actors across ministries. There are several
other examples of programmes that are less politically prominent but have
sought to work across ministries, especially in the Nordic countries. Sweden’s
Visanu programme (three agencies), Norway’s Arena and Centres of Expertise
programmes (three agencies) and Finland’s Centres of Expertise (inter-ministerial
committee) are all examples. While the inter-agency rivalries may not be
resolved by such arrangements, they certainly have opened doors to greater
communication for improved policy coherence.
Work in consort with regional levels in programme development for
capacity building, coherence and complementarity.
In several countries, cluster programmes began at the regional and local
level well before any explicit national level policy. In those cases, the national
level can learn from the experiments across different regions in the development
of its programme. In other countries, the regional level lacks the capacity and/or
financing to effectively support a cluster programme. In such cases, the national
level has a role of building regional capacity, an important issue in the context of
decentralisation trends. For countries where there exist numerous regional level
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initiatives, the national government may seek to promote some coherence in the
pursuit of national goals or identify opportunities to provide complementary
programmes.
Several countries have addressed this national-regional coherence question
by actively involving the regional level in selection and funding. Numerous
programmes have a regional co-financing requirement, such as Sweden’s
VINNVÄXT and Visanu programmes, the Centres of Expertise programmes in
Finland and Norway, as well as the Pôles de compétitivité and SPL programmes in
France. All the national programmes in Germany require active regional support
in terms of funding and programme implementation. While many programmes
seek to build regional capacity in supporting clusters, the Czech Klastry
programme is the most explicit in this goal.
Risks
Beyond questions of appropriateness and coherence, there are inherent
risks related to the use of public policy to support clusters. These risks concern
the strategy of public sector investment, notably the cost of cultivating nascent
clusters and the risks of vulnerability due to insufficient diversification of
sectors or a high degree of dependence on an anchor firm. In some cases the
cluster approach is actually used to address these risks by serving as a vehicle
to promote diversification. While addressing these risks in strategy requires
strong analysis, there are strategies for designing programmes to reduce some
of the common risks inherent to a cluster-type approach.
Structure the programme to minimise the associated risks, such as
picking winners and lock-in.
The public sector at national and regional levels is less equipped than the
private sector to manage business risks such as predicting movements in highly
competitive and rapidly evolving product markets in the context of globalisation.
There are also greater risks that cluster groups unduly influence government in
their favour (administrative capture) when they become the clear focal point of
policy. Furthermore, supporting the strongest existing clusters may reduce the
opportunities for innovation that could jeopardise these selected clusters.
Instruments that are less industry specific and/or region-neutral can be easier to
manage politically. Therefore, national policy makers can take steps to mitigate
those risks such as revisiting cluster designations periodically or giving other
types of firms an opportunity to compete.
Several OECD country programmes have tried to mitigate these common
risks. One strategy used by the programmes is to involve key researchers
and firms in the selection process. There are also programmes that are
complementary in terms of a cluster’s stage of development such that not
only the strongest existing clusters receive support. For example, the Oregon
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Cluster Network in the United States and the Arena programme in Norway
allow clusters in earlier stages of development to participate with the idea that
if they develop they may be eligible for programmes with greater resources. In
addition, the competitive process of numerous programmes has helped
cluster initiatives form that later have grown with other resources. Many
candidates not selected by the VINNVÄXT programme in Sweden or the
BioRegio programme in Germany were nevertheless able to find alternative
resources and develop, therefore the “picked winners”, albeit through a
competitive process, were not the only parties to benefit.
Ensure sufficient private sector engagement, as their motivation ensures
longevity of partnerships and their skills reactivity to market changes.
Given the risks mentioned above, the role of the private sector in helping
to guide regional economic strategies, including cluster-based programmes, is
crucial. Cluster programmes can offer tangible benefits to the private sector
(e.g., labelling, increased R&D investment or tailored support services) if
structured properly. Yet many programmes, particularly in Europe, are
heavily driven by the public sector and allow for more limited engagement of
public-private partnerships. The programme’s conception, target selection
and implementation all need to take the private sector role into account
more explicitly.
The more effective strategies to ensure private sector engagement tended
to involve the private sector early on. For example, in the United States, the two
state examples of Georgia and Oregon illustrated that private actors helped
in the design and administration of the programmes. The Oregon Business
Council, a non-partisan association of top business executives, helps to develop
the Oregon Business Plan Agenda with input from Oregon’s clusters. To ensure
that smaller firm needs are heard, they canvass the clusters instead of simply
relying on the state’s leading firms for input. In Spain’s Basque Country, the
private sector was involved in the dialogue to select the potential clusters as
well as in the decision to participate. Even though most programmes do have
some sort of competitive selection process to gauge private sector motivation,
this has not proven sufficient for long-term private sector engagement.
Set outcome targets, even if it is difficult to evaluate the causal relationship
of public policy on private action.
The more the programmes emphasise changes in behaviour or attitudes
among firms/entrepreneurs, the more difficult those outcomes are to measure.
The easier end of the spectrum is to measure the take up of services by
participants, but these statistics usually leave unanswered the question of
whether a cluster policy is more effective than another approach to regional
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Future research
There are still many unanswered questions regarding the benefits of
clusters themselves as well as the effectiveness and efficiency of cluster
policies seeking to influence their development. These questions are even
more pressing given the rapid changes in industry transformation as well as
the continued proliferation of policies at all levels of government in OECD
countries. A number of themes merit additional consideration by researchers
and international organisations such as the OECD.
Do cluster policies have an influence on the transformation of industries
with globalisation? As industries transform and OECD clusters seek to keep
pace with these transformations, public policy may help, may hurt or simply
be marginal to the overall picture. OECD countries are interested in how
policies can help regions, especially those highly exposed to international
competition, best manage off-shoring and other processes related to
globalisation. In general, the cluster model seems still to have a role to play in
traditional manufacturing activities, offering a means to build critical mass
among SMEs, increase the flow of information on new technologies, improve
product quality and upgrade workforce skills. At the same time, the ability of
firms to make external linkages cannot be ignored and regional strategies
need to take account of these economic realities. For example, in Veneto, Italy,
many cluster members are off-shoring aspects of operations to a common
area in Romania. Off-shoring is not only a major concern for textiles, as higher
value added services and even R&D functions are migrating. Public policy may
be able to facilitate the identification of off-shoring partners or organise
support in such contexts so as to help the region best manage the impacts of
these trends.
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Notes
1. The OECD, in conjunction with Nutek, the Swedish Agency for Economic and
Regional Growth, is currently conducting a study on regional level strategies to
help address this gap.
2. Evaluation being a critical issue, The Competitiveness Institute, a not-for-profit
alliance of cluster practitioners, seeks to address this topic through symposiums
and a forthcoming publication.
3. Reports may be obtained from Nutek, the Swedish Agency for Economic and
Regional Growth.
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EC and Enterprise Directorate-General (2003b), “Background Paper on Methods for
Cluster Analysis”, prepared for the Trend Chart Policy Workshop, Innovative Hot
Spots in Europe: Policies to promote trans-border clusters of creative activity, held in
Luxembourg, 5-6 May 2003.
EC and Enterprise Directorate-General (2003c), Thematic Report: Cluster Policies, Brussels.
EC and Enterprise Directorate-General (2003d), Theme-specific Country Report – Denmark,
European Trend Chart on Innovation.
EC and Enterprise Directorate-General (2004a), Annual Innovation Policy Trends and
Appraisal Report – Denmark, European Trend Chart on Innovation.
EC and Enterprise Directorate-General (2004b), Annual Innovation Policy Trends and
Appraisal Report – Germany, European Trend Chart on Innovation.
Gordon, I. and McCann (2000), “Industrial clusters: Complexes, agglomeration and/or
social networks?”, Urban Studies, Vol. 37(3), pp. 513-532.
Holm Dalsgaard, Mette (2001), “Danish Cluster Policy: Improving Specific Framework
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distribution of research in UK regions”, Centre for Policy Studies in Education,
University of Leeds.
Kodama, Toshihiro (2004), “Cluster Promoting Initiatives in Japan”, presented at the
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Krugman, Paul and A.J. Venables (1990), “Integration and the Competitiveness of the
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London.
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I. BIBLIOGRAPHY
Lainé, Frédéric (2001), “Une approche statistique des systèmes productifs locaux” (A
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Local Production Systems), DATAR, la Documentation Française, Paris.
Loughlin, John (2000), “The Regional Situation in the Year 2000”, Assembly of the
European Regions, Brussels.
Lublinski, Alf Erko (2003), “Does Geographic Proximity Matter? Evidence from
Clustered and Non-clustered Aeronautic Firms in Germany”, Regional Studies,
Vol. 37, pp. 453-467.
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Group.
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Economic Development, Washington, DC.
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Reich, Robert (1991), The Work of Nations: Preparing Ourselves for 21st Century Capitalism,
New York, Alfred A. Knopf.
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PART II
Case Studies
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PART II
Chapter 7
Canada
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Industry Canada
Research Council of Canada, the Canadian Space Agency, the Copyright Board of
Canada and the Business Development Bank of Canada, among others.
NRC, the sponsor of this cluster strategy, is the leading federal agency for
R&D development and has been for almost a century. It is composed of over
20 institutes and national programs, spanning a wide variety of disciplines and
offering a broad array of services located in every province in Canada to help
stimulate community-based innovation. NRC is an agency of the Government of
Canada, reporting to Parliament through the Minister of Industry, and governed
by a council of 22 appointees drawn from its client community. Its institutes
and programmes are organised around five themes: life sciences, physical
sciences, engineering, technology and industry support, and corporate services.
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Table 7.1. Funding for NRC cluster initiatives: Central and Western initiatives
Initiative Institute(s) involved Amount awarded Objectives
Sustainable urban NRC-IRC (CSIR) CAD 10 M over ● Catalyze the growth of a technology cluster that builds on
infrastructure 5 years (+ CAD 20 M local capacity
in supporting ● Help Regina meet its infrastructure challenges
initiatives and become a national centre of research, expertise and
from federal, testing
provincial partners) ● Provide a focal point for IRC urban infrastructure
programs and collaborations in the west
● Facilitate development of competitive advantage to
SK businesses in infrastructure technologies, IT,
and environmental management
● Contribute to development of cost-effective, community-
based infrastructure solutions for use across Canada
Nutri-sciences NRC-IMB (INH) CAD 20 M over ● Strengthen research base on Prince Edward Island (PEI)
and health 5 years ● Foster PEI’s nutri-sciences cluster
● Contribute to developing synergies with knowledge-
based industries in Atlantic Canada and elsewhere
● Contribute to new company creation and new jobs
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Notes: The wireless systems initiative in Cape Breton was discontinued after a formative evaluation of
the ensemble of initiatives. The e-health initiative in Saint John was consolidated into the other New
Brunswick locations to increase efficiencies and effectiveness.
Source: Government of Canada, National Research Council.
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Administrative boundaries
NRC is a national organisation with a national mandate, and thus
encourages collaboration, outreach and networking across regions and
internationally. All clusters have linkages and networks beyond their region
– selected examples include: Ottawa photonics with Vancouver, Toronto,
Quebec city, Boston, Phoenix, etc.; Saskatoon FFN with a Prairie research
network; Winnipeg biomedical with Calgary, Toronto, Halifax and Minnesota;
Edmonton nanotechnology with California, Quebec; Vancouver hydrogen and
fuel cells with Alberta, Toronto, Montreal, China; Saguenay aluminium with
Montreal, Windsor, Waterloo, etc.
5. Instruments
The cluster strategy includes a range of potential instruments with a
focus mainly on science-based innovation.
● Identification and benchmarking: Identification and benchmarking were part
of the negotiated process for the selection of clusters to support.
● Engagement of actors: Networking and joint initiatives to strengthen the
clusters (e.g., demonstration collaborations), branding are possible.
● Government service delivery: Other than resource allocation as discussed below,
there is not an explicit focus on reorganising government service delivery.
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Key cluster
Develop Research Capacity Develop Cluster Networks
activities
and Highly Qualified People (HQP) and Foster Industry
(ongoing)
Immediate
outcomes Development
Increased Improved Improved
(ongoing) of new HQP Strengthened Increased
research access access
attraction cluster industry
capacity to research to technology
of HQP networking development
facilities knowledge
to institute
Key national
Strengthened national innovative and competitive capacity
outcomes
Improved health and quality of life for Canadians
(10-15 years)
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Bibliography
Industry Canada (www.ic.gc.ca).
National Research Council (www.nrc-cnrc.gc.ca).
National Research Council (NRC) (2006), Cluster Studies for NRC Technology Cluster
Initiatives: Final Report, Prepared by Hickling Arthurs Low, 23 August 2006.
OECD (2002), OECD Territorial Reviews: Canada, OECD Publications, Paris.
OECD (2004), OECD Territorial Reviews: Montreal, Canada, OECD Publications, Paris.
OECD (2006), OECD Economic Surveys, Canada, Vol. 2006, Issue 10, OECD Publications,
Paris.
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Competitive Regional Clusters
© OECD 2007
PART II
PART II
Chapter 8
Czech Republic
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Ministry of Industry
and Trade
Ministry
CZMR Bank Ministry
of Education,
(Development for Regional
Youth
Bank) Development
and Sports
CzechInvest
R&D
Regional Advisory
SME financing initiatives
Information
support KLASTRY
Centers (RPIC)
programme
and Business Innovation
Centers (BIC)
Science and Technology Parks
Science Parks
Association (1990)
Regional
entities
Municipalities
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Industry. These links, as well as links between clusters with regional public
entities and science parks, are hoped to be developed as cluster initiatives
become fully functioning. In the next round of structural fund programmes
starting in 2007, there will be additional programmes for science and
technology policy and technology platforms that could also involve linkages.
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Source: Sölvell, Örjan et al. (2005), Entrepreneurial Innovation in the New Member States: Challenges and
Issues at Stake for the Development of Clusters of Innovative Firms: 1st Interim Report, Regional Clusters in the
EU10, 15 July 2005.
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Administrative boundaries
Klastry is open to projects that are at a regional, national or cross-border
level, although there are no examples of Czech based trans-national clusters
receiving support as yet. An important potential supra-natural cluster for the
automotive industry has a strong base in the Czech Republic. Although it is
not currently participating in the Klastry programme, it may be included in
future programmes for technology platforms.
5. Instruments
The Klastry programme essentially subsidises the cost of either identifying
other potential cluster members or setting up the cluster initiative. The
programme funding amount possible can reach up to EUR 1.6 million total over a
maximum of three years (with at least overall matching funds for eligible costs by
the cluster or other public funds), which offers opportunities for joint projects
beyond networking but not for significant R&D projects.
● Identification and benchmarking: CzechInvest plans to work to improve regional
statistics to help regions better identify clusters and analyse the regional
economy. It is expected that benchmarking among national and international
clusters will be part of cluster monitoring. The goal is to support at least
30 cluster mapping exercises (42 completed to date) in both traditional and
new sectors, so this goal has been exceeded. Part A of the Klastry programme
is designed specifically to finance a cluster initiative’s search for other cluster
partners. The Klastry programme does require on-going information updates
to satisfy programme monitoring and evaluation requirements and one of the
eligible expenses for clusters is international benchmarking exercises. The
National Innovation Plan anticipates on-going evaluation of clusters as a tool
to support regional innovation systems.
● Engagement of actors: Prior to launching the programme, CzechInvest offered
a training and cluster awareness sessions to over 30 cluster facilitators,
60 academics and 350 regional government and private sector actors. Periodic
trainings as well as public relations on the cluster concept are in process, such
as the Annual National Cluster Conference. CzechInvest also plans to develop
a formal accreditation process for specific cluster facilitation skills. The
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Notes
1. As described in the 2005 OECD Territorial Reviews: Czech Republic, the mandate of the
Ministry for Regional Development includes regional policy, regional business
support, housing policy and development, area planning, tourism, and urban and
rural development along with other responsibilities. The Ministry also co-ordinates
activities of other ministries in certain related topics. Over time, several programmes
initially under its charge have migrated to other ministries, for example the SME
support is now under the Ministry of Industry and Trade (MIT), and Structural Funds
for industry as well as trade promotion are under the executing agencies of MIT. The
increasing number of specialised agencies has been noted to make co-ordination
more difficult.
2. Another cluster mapping project was conducted by researchers not affiliated with
CzechInvest. For more information, see Mikoláš, 2005.
Bibliography
Abrám, Josef et al. (2005), “Opportunities for the Development of Clusters in the
Czech Republic”, available as a conference paper from the European Regional
Science Association, www.ersa.org/ersaconfs/ersa05/papers/572.pdf.
CzechInvest (www.czechinvest.org).
European Commission (EC) (2005), “Policy Brief: Czech Republic”, prepared for the
Ministerial Conference “Towards a Knowledge Society – the Nordic Experience”,
14-15 November 2005 in Gothenburg, Sweden, http://europa.eu.int/information_society/
activities/gothenburg_conference/doc/pdf/brief_czech.pdf.
European Commission (EC) and Enterprise Directorate-General (2005), Annual Innovation
Policy Trends and Appraisal Report: Czech Republic 2004-2005.
Klusáček et al. (2004/5), Final Report of the Project on CSF Evaluation: 4/04 Barriers to Growth
of Competitiveness of the Czech Republic, Prepared for the Ministry for Regional
Development of the Czech Republic, by Technology Centre ASCR in co-operation
with the Economics Institute ASCR and financed by the Joint Regional Operational
Programme (EC).
Lukasik, Lubos (2006), “Support of Company Competitiveness in the Czech Republic”,
Presentation made in Brussels 15 March 2006.
Moravia-Silesia Engineering Cluster, www.ostrava-city.cz.
Mikoláš, Zdeněk (2005), “Czech Republic”, in Business Clusters: Promoting Enterprise in
Central and Eastern Europe, OECD Publications, Paris.
Ministry of Industry and Trade (2004), “Clusters in the Czech Republic: Supporting
innovative and competitive businesses across the Czech Regions”, Internal draft
document dated October 2004.
OECD (2004), OECD Territorial Reviews: Czech Republic, OECD Publications, Paris.
Sölvell, Örjan, Christian Ketels and Torbjörn Folkesson (2005), Entrepreneurial Innovation
in the New Member States: Challenges and Issues at Stake for the Development of Clusters
of Innovative Firms: 1st Interim Report, Regional Clusters in the EU10, 15 July 2005.
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PART II
PART II
Chapter 9
Finland
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Parliament
General Policy
Framework
Cabinet STPC
formulation, financing
and co-ordination
S&TI policy
Academy of National
Finnish Finland: four Technology
National Fund research Agency
for R&D councils (TEKES)
Other
modulating institutions
(SITRA)
Regional Employment
Municipalities and Economic
Development Centre
R&D performers
schools, 3 technical of Finland (VTT), National
Corporate universities, 4 art schools, Research and Development
R&D 1 military academy) Centre for Welfare
Polytechnics (31) and Health (STAKES),
Vocational education Agricultural Research
institutions Centre of finland
Business parks
and incubators
service producers
Goods and
Source: OECD (2005), OECD Territorial Reviews: Finland, OECD Publications, Paris based on Nieminen, M.
and E. Kaukonen (2001), “Universities and R&D Networking in a Knowledge-Based Economy”,
SITRA, Report Series, 11, 2001.
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Source: Government of Finland, Ministry of Interior’s Department for the Development of Regions.
Using the CoE programme as a model, the Regional Centres Programme was
launched in 2001 with the goal of developing small and medium-sized urban
hubs as a source of competitiveness for the region with a focus on sub-regional
co-operation. The Centres are less business-focused than the CoE and more
focused on linking the core city and peripheral municipalities within a functional
area. In this context, the CoE appear as a strategic element of policies to reinforce
the economic role of small and medium-sized urban hubs.
At the sub-national level, Regional Councils are responsible for developing
long-term strategic Regional Plans that are in line with national regional
development level goals. These Councils also serve as an interface with the
private sector as well as other levels of government to promote coherence. From
these long-term plans flow Annual Implementation Plans that break down
funding sources from supra-national, national, local and private sources. They
integrate different development components and in particular the CoEs
(territorialisation of innovation).
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Ministry of Education and the Ministry of Trade and Industry are the driving
force for innovation related work, each with a focus on their sectoral mission.
They work through the Academy of Finland, TEKES and the Technical Research
Centre of Finland (VTT). These efforts to develop innovation systems have
resulted in its success at promoting effective R&D expenditure and co-operation
among universities, research centres, governments and the private sector.
Finland is now seeking to transition from a science-and technology-focused
innovation system to a more broad-based innovation approach integrating
regional development concerns.
The National Cluster Programme was clearly related to Science and
Technology Policy. The R&D focus of the programme was initiated by the
Council, which offered seed money. The programme also encouraged funders of
research and technology transfer to support these clusters (TEKES and the
Academy of Finland). The CoE are related in the sense that they mainly focus on
technological expertise. Science parks, which the CoE work with, are usually
local level initiatives. Some of the other policies are directly linked to national
innovation system goals, such as the Centres of Excellence Programme.
Source: Pentekäinen, Tuomo (2000), “Economic Evaluation of the Finnish Cluster Programmes”,
Working Paper # 50/00 for the VTT, Group for Technology Studies.
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Administrative boundaries
The South-East Finland CoE, Koske, supports trans-border cluster links with
Russia in the area of logistics. This expertise is used in several international
projects, such as Straightway, which is a joint project of local ports, logistics
companies and regional development organisations. There exist co-operation
arrangements between Finnish and Russian universities and research centres.
Although not part of the National Clusters or CoE programmes, the Network
of Innovation Relay Centres (IRC) connects innovation centres in 33 countries as
well supports technology transfer between companies and research institutes.
IRC Finland is the local manager. The programme is financed by the EU and
TEKES. IRC Finland searches international partners for technology developed
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5. Instruments
The National Cluster programme focused on concentrating resource
allocation, R&D projects and to a certain extent engagement of actors. Per an
evaluation of the CoE, the smaller centres focused more on cluster-based
development and internationalisation and the larger Centres focused more on
R&D projects conducted with universities and other research institutions.
● Identification and benchmarking: The National Cluster programme involved a
mapping exercise that may have involved some general benchmarking. The
CoE programme may involve benchmarking with data collected across
Centres.
● Engagement of actors: In both cases the engagement of actors was clearly a
goal. In the National Cluster programme, co-operation among firms, research
institutions and the public sector was a goal, but an evaluation noted that the
short-term, project-based approach was not conducive to cluster relationship
building. It also helped firms better appreciate the supply chain. In an
evaluation of the Centres, one of the most important findings was that they
served as an effective framework for building regional innovation systems by
engaging actors through joint strategy and cluster specific forums.
● Government service delivery: Since the mega cluster support was managed by
different sectoral ministries, the reorientation of government service was not
an explicit goal. However, an evaluation noted that an interesting result of the
National Cluster programme is that it also helped get public entities that fund
projects to work more effectively. In terms of the CoE, an evaluation noted
that regional actors could do more to re-orient government services around
them. There is also a link with regional Economic Development Centres. In
addition to the services they provide, CoEs are dependant on funding granted
by these centres.
● Skilled HR: This was not an explicit focus of either programme although
different Centres or clusters may have incorporated this aspect into their
initiatives. In many Centres of Expertise it is important that R&D-oriented
growth clusters have skilled human resources available. Therefore projects
initiated by local CoEs have trained in total over 80 000 persons in 1999-2005
mainly in projects funded by the European Social Fund.
● Entrepreneurship and innovation: Both programmes are focused on innovation,
research and technology transfer applications. The entrepreneurship aspect
is more prominent in the CoE as they seek to generate new firms and support
SMEs through their projects in the technology parks and incubators with
which they are typically affiliated.
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Bibliography
Academy of Finland (www.aka.fi).
Centres of Expertise (www.oske.net).
European Commission (EC) and Enterprise Directorate-General (2005), Annual Innovation
Policy Trends and Appraisal Report: Finland 2004-2005, http://trendchart.cordis.lu/.
Finnish science and technology information service (www.research.fi).
Halme, Kimmo (2003), “Improving Innovation Policy Co-ordination through Inter-
ministerial Cluster Programmes”, presented at the conference Trend Chart Policy
Benchmarking Workshop, Luxembourg, 5-6 May 2003.
Kavonius, Veijo (2004), “Innovation and Regional Development”, presentation held in
Florence, Italy November 2004, sponsored by the Tuscany Region, the EU ERIK
Network and the OECD.
Luukkainen, Sakari (2001), “Industrial Clusters in the Finnish Economy”, in OECD
Proceedings, Innovative clusters. Drivers of National Innovation Systems, OECD
Publications, Paris.
OECD (2005), OECD Territorial Reviews: Finland, OECD Publications, Paris.
Pentekäinen, Tuomo (2000), “Economic Evaluation of the Finnish Cluster Programmes”,
Working Paper # 50/00 for the VTT, Group for Technology Studies, http://virtual.vtt.fi/
inf/julkaisut/muut/2000/wp50.pdf.
Rouvinen, Petri and Ylä-Anttila, Pekka (1999), “Finnish Cluster Studies and New
Industrial Policy”, Chapter 15 in OECD Proceedings, Boosting Innovation. The Cluster
Approach, OECD Publications, Paris.
TEKEL-Finnish Science Park Association (www.tekel.fi).
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ANNEX 9.A1
Raahe-Nivala-Tornio CoE
Metal and maintenance
North Carelia CoE
services
Wood technology and forestry, Network CoE
polymer technology and tooling for tourism
Kokkola Region CoE
Chemistry
Mikkeli Region CoE
Composite and coatings
Source: Government of Finland, Ministry of Interior’s Department for the Development of Regions.
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Competitive Regional Clusters
© OECD 2007
PART II
PART II
Chapter 10
France
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government has requested that, when appropriate, pôles not selected be re-
oriented via the SPL programme and that pôles make a stronger effort to
include SMEs.
SPL Club
Up to EUR 500 million in loans, guarantees, and (CDC only) equity
(CDIF)
Regions, 96 SPL
departments clusters
67 pôles de compétitivité and local
July 2005 designation governments
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Innovation and the National Agency for Research. A budget of 11 million for the
three-year program will be available to support the management of the pôles.
Initially the amount planned for the programme was EUR 750 million for
approximately 10-15 clusters, the amount on average per cluster being approx.
EUR 16.7 to 25 million per cluster per year for three years. With the selection of
67 clusters, the funding amount was doubled to EUR 1.5 billion. The 15 labelled
international or “destined” to be international should receive approximately 80%
of that central government funding. Therefore, this gives an average for the
international clusters of EUR 26.7 million per cluster per year for three years,
excluding co-financing, for collaborative R&D projects. For the other clusters
(regional or inter-regional clusters), the amount is approx. EUR 1.9 million per
year per clusters for the same purpose. These are of course theoretical
calculations as the funding process is only beginning in 2006 and the funding will
be based on project proposals by the clusters, albeit the exonerations are based on
a formula for all firms depending on firm size. Additional funds from the EU,
regions and local governments are expected for these projects within EU
guidelines, however there is no set formula for co-financing.
The SPL programme was designed to encourage firms to work together as an
initial step. The total budget has been approximately EUR 4 million out of the
DATAR (now DIACT), however much of the funding to SPLs come from other
sources such as the Ministry of Economy, Industry and Finance regional offices.
In 2000, for example, EUR 1 spent by DATAR leveraged EUR 4 in funding from
other public sources and that figure is estimated to have increased as regional
governments have grown more engaged in financing such programmes. In one
exceptional case, an SPL that received EUR 20 000 in 2005 leveraged 800 000 in
other funds, a factor of one to 40.
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Administrative boundaries
The clusters within France may extend across many local administrative
borders, covering multiple geographic units. In continental France there are
95 departments and 22 regions. Since the specific modalities for access to
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funding and co-financing are not yet finalized, the potential challenges of
cross-jurisdictional clusters have yet to be fully felt (15 are defined as inter-
regional in scope and many pôles actually include multiple regions). The
boundaries are defined by the cluster participants as listed in the application,
although the central government did request in one case a merger of two
proposals for what they considered to be one cluster. The designated R&D
zones that accompany this policy were subsequently defined based on the
expertise of the clusters and other local institutions and administrative
factors. Trans-national clusters, especially with Germany in the context of EU
programs, are encouraged but there is nothing specific in the current policy to
promote such collaboration other than to study the possibilities.
5. Instruments
For SPLs, the financings were mainly focused on collective management
expenses to engage actors. They include: facilitation, audits, the creation of
Internet websites, internal communications, studies and diagnostics, and to a
more limited extent, commercial initiatives or innovation. Human resource
issues were also addressed by the SPLs, in at least one example of co-ordination
with a local institution for an adapted technical degree.
The objective in the pôles programme is to increase the generation and
diffusion of innovation through R&D that can lead to commercialisation. This will
depend on the effective collaboration of actors within the pôle who may have not
worked together in this way before. The reallocation of government resources
and the tax incentives towards selected clusters support this objective. The
project-based approach allows a certain degree of flexibility for clusters in their
proposals to pursue what is of greatest value to them. The success of the
accompanying reforms in innovation framework conditions could reinforce the
potential for success. The instruments for the pôles include:
● Identification and benchmarking: Clusters are self-selected applicants and there
was no requirement to have been previously identified via a mapping or
benchmarking exercise. As described above, France did do a mapping exercise
in the context of the SPL programme and this was used as a criterion in
programme eligibility.
● Engagement of actors: The request for proposals was a key factor in inciting
firms, universities and research institutions to work together formally. The
nature of pre-existing collaboration varied considerably. Some pôles came
together in a matter of months to respond to the request for proposals.
Several were already formally organised in the form of an SPL that then
added large firms to apply to be a pôle. In other cases, the actors may have had
some informal collaborations but not in the context of a cluster initiative. The
governance structure of each pôle requires the involvement of numerous
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public and private actors. In fact, the process was noted to have brought
together different layers of government who may not have worked together
before in such a way.
● Government service delivery: The programme has entailed co-ordination at the
central level, although the details of this co-operation in practice are still being
worked out. Sub-national governments have also played an active role in
supporting candidates for pôles and will participate in financing. It is expected
that the regions and other local entities will take the pôles into account in their
overall strategies. An interesting result of the programme is that it will help
regions learn more about how to support economic development through
clusters and help them restructure their policies to be more supportive of
clusters.
● Skilled HR: The promotion of skilled HR is not an explicit aspect of the policy.
The links between business and higher education institutions outside of
research issues are not strong. The timeframes for the cluster policies are
more accelerated than that of education policies.
● Entrepreneurship and innovation: The programme is targeted to clusters that
already have critical mass by increasing collaboration within the triple helix
model. The focus is on existing firms in the cluster application and not on
start-ups (via financing, incubators, etc.). Other reforms to the public
research sector could improve the currently inexistent mobility of public
research staff and their potential involvement in spin-offs and start-ups.
● Resource allocation and investment (including branding): The programme requires
ministries and agencies to dedicate funds from existing programs to the
selected clusters. In the first stage of the programme, the pôles have had to
complete different applications by funder, which has led to discontent. The
programme has therefore been modified to have a one-stop shop fund that
will be administered by the Business Division of the Ministry of Economy,
Finance and Industry for funds coming from the ministries, although not the
agencies. Critiques of this funding mechanism note that it is too centralised
and will not give as prominent a role to SMEs. It is hoped that the branding
will also attract additional public and private support, especially for the
15 clusters with an international orientation, and this will be taken into
account by the Invest in France agency. A committee will monitor the
integrity of the pôle de compétitivité label. The pôles will also serve for regional
branding and marketing initiatives.
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Bibliography
Beffa, Jean-Louis (2005), “Pour une nouvelle politique industrielle” (Towards a New
Industry Policy), Report submitted to the French Government, 15 January 2005.
Blanc, Christian (2004), “Pour un écosystème de la croissance” (An Ecosystem for
Growth), Report submitted to the Prime Minister, National Assembly.
CIACT (Le Comité interministériel d’aménagement et de compétitivité des territoires), notes of
the meeting held 6 March 2006.
CIACT (Le Comité interministériel d’aménagement et de compétitivité des territoires), notes of
the meeting held 24 October 2005.
CIADT (Le Comité interministériel de l’aménagement et du développement du territoire), notes
of the meeting held 12 July 2005.
CIADT (Le Comité interministériel de l’aménagement et du développement du territoire),
notes of the meeting held 14 September 2005.
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ANNEX 10.A1
ENGLAND Matériaux
BELGIUM
Filière Industrie du commerce
halieutique Textile
Nord- Construction ferroviaire
Santé, nutrition
English Channel Pas-de-Calais
Picardie LUXEMBOURG GERMANY
Logistique
Transactions électroniques Utilisation
sécurisées Propulsion Mobilité non agricole
Haute- en milieu urbain de produits Matériaux
Filière équine
Normandie Santé, cancer, infectiologie innovants
Basse-Normandie Logiciels et Images, multimédia Molécules,
Mer systèmes complexes Sécurité, environnement Lorraine
Bretagne Ile-de-France
innovations thérapeutiques
Électronique,
télécommunications
Cosmétique Champagne-
Aliments Automobile Pays-de- Centre- Ardenne Alsace
de demain Véhicule
Biothérapie, la-Loire Val-de-Loire Nucléaire, du futur
génie civil Filière
Enfant végétale Sciences, Santé, nutrition Microtechniques
électricité
Mécanique Poitou- Bourgogne Franche- SWITZERLAND
et composite
Charentes Comté
Énergie Plasturgie
Pointe-à-Pitre Numérique renouvelable
interactif, Limousin Innovations
céréales Virologie, Décolletage
Nouveaux véhicules Mécanique Chimie
Atlantic urbains Céramique générale Textile, bus et camions,
micro-ondes Viandes, Loisirs numériques
Ocean produits carnés Nanotechnologies ITALY
et réseaux Ingénierie
Fort-de-France Auvergne
Lasers, agro-santé
Bois Rhône-Alpes
Martinique Nucléaire Provence-Alpes-
Aquitaine
Cayenne Midi- Innovations Côte d’Azur
Pyrénées fruits et Parfums, saveurs
légumes Énergies non-polluantes
Équipements
Guyane sports et loisirs Aéronautique, Agro-alimentaire Matériels et logiciels
Optique, de télécommunications
Saint-Denis systèmes embarqués, Languedoc-
cancer, bio-santé imagerie
Roussillon Mer, sécurité, sûreté
Énergies Gestion des risques Corse
Réunion ANDORRA renouvelables naturels
Note: The location of each pôle is based on the postal address of the application in response to the call
for proposals. The pôle listed in this map for Bidart is physically located in the area near Lyon.
Source: Le Monde newspaper based on data from DATAR.
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Water sport
Forestry wood paper
0 200 km
Note: Map may not include all SPLs designated by a national commission.
Source: www.districts-industriels.com.
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Competitive Regional Clusters
© OECD 2007
PART II
PART II
Chapter 11
Germany
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GA-networking 2005 on-going n.a. EUR 300 000- Cluster management 70% public;
500 000 (staff and equipment) 30% from other
of the contracting agency. sources
No operational funding
for enterprises
BioRegio Initiated in 1995; EUR 90 million In practice, the n.a. n.a.
programme for winning regions 4 winning regions
period plus preferential (17 applicants)
1997-2001 access to general received around
biotech funding 2/3 of all available
worth over biotech funding in
EUR 700 million the first two years
BioProfile Initiated in 1999, EUR 50 million 3 out of 20 selected n.a. n.a.
programme
period 2001-06
InnoRegio 1999-2006; next EUR 110 million 23 networks out All costs related to R&D Around 40%
phase to extend (private investment of 444 applicants; projects (labour, private finance
funding of EUR 50 million 500 projects buildings, training, etc.) leveraged in first
for 19 most so far) for these networks period
successful financed so far
regions
Regional Growth 2001-06 EUR 75 million n.a. All cost related to joint n.a.
Poles R&D and
commercialisation
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Learning Region 2000-06 EUR 115 million Around 80 regional Costs for educational EU co-funding
(EUR 65 million projects selected institutions measures
public funds plus for funding from in the field of life-long
additional EUR over 250 proposals learning; new network
50 million from ESF based projects
for this period
Competence 1999 on-going Not a funding 102 networks Funds spent to operate n.a.
Networks programme; established so far, the Internet site/network
EUR 2 million covering
21 technology
fields in 32 different
regions
NEMO 2002-05 EUR 10 million In 1st round Financial support is From Ministry
– Network 23 projects restricted to network budget
Management selected; management costs.
Eastern 2nd round The network management
Germany 15 projects must be carried
selected by non-profit institutions
or firms that are
“predominantly
in the public interest”
BioRegio
Given the strong national strategic focus of the programme, the issue at
the outset was to maintain a strong geographical concentration and to avoid
spreading the funds among too many locations. The programme is based on
a competitive selection to identify the regions with the most promising
potential in biotechnology research and commercialisation. The criteria
included a critical mass of competitive enterprises, high profile research
institutions, supporting services, networking between research labs, research
commercialisation strategies, and appropriate finance sources. The extension
of the programme to additional sites through the BioProfile was seen as a sign
that other German regions were becoming more active and successful in
developing business in the Biotech field.
Seventeen regions prepared submissions for the competition, with four
selected as key regions. A few of the non-selected regions were later included in
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Munich Two universities and large research institutions Roche Diagnostics, a large biotech production
site, plus around 34 biotech companies
Rhineland Highest density of research institutions Bayer plus several medium-sized pharmaceutical
in Europe, including several in biotech companies (around 20 in 1994)
Rhine-Neckar One university and several research institutes Large pharmaceutical/chemical companies
(Roche, BASF) plus several biotech companies
Jena One university and three research institutes One medium-sized pharmaceutical company,
five biotech companies
Source: Ernst, Holger and Nils Omland (2004), “Vitalisation of Industry through the Promotion of
Knowledge Intensive New firms: The Case of German Biotechnology”, Presented at the Japan Institute
for Labour Policy and Training, Tokyo, Japan, 26 March 2004.
InnoRegio
InnoRegio was advertised by the BMBF as a broad, open-themed
competition. The goal was to develop self-supporting innovation networks and
create locations with long-term competitive ability. The jury selected
23 networks (out of 50 pre-selected candidates from a total of 444 applicants)
which were partnerships or consortia of companies, educational and research
institutions and local governments. The second phase of the process centred on
development of the project. The selected applicants were then given the label
InnoRegio and were awarded DM 300 000 to develop the network and prepare
the project. Advice and support were provided through the federal ministry.
GA-networking
Support for clusters through the GA-networking initiative (period 2004-6)
can be allocated to areas that fall under one of five categories:
● Category A: comprises regions in the new states that face the most serious
structural problems.
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● Category B: consists of those regions in the new states and Berlin that have
already made significant progress.
● Category C: include the economically weakest regions of the western
German states.
● Category D, E: cover the structurally weak regions in western Germany.
The nature and ceilings of support varies according to the category of
region concerned, with higher levels of support available for categories A-C.
In 2004, the GA mechanism allocated EUR 700 million, of which EUR 600 million
was for the new states and EUR 100 million for the western states.
Administrative boundaries
The programme participants tend to be bounded by the Länder given their
role in the implementation of many of these programmes.
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5. Instruments
For the smaller programmes funding is provided primarily for network
establishment and management, directly to a consortia or association formed
for the specific purpose. The focus is therefore on the instruments to engage
actors. For example, the GA-networking initiative only permits outlays on the
establishment of supra-enterprise structures and network management
(expenditure for staff and material). Spending by the enterprises involved is
not eligible for assistance.
In the case of the larger programmes, funding can be used for all R&D
and related activities (staff, equipment, training, product development and
commercialisation and marketing) on condition that the projects are clearly
defined joint projects. For BioRegio, the range of instruments includes financing,
consulting, knowledge and public relations (see Table 11.3).
Source: Ernst, Holger and Nils Omland (2004), “Vitalisation of Industry through the Promotion of
Knowledge Intensive New firms: The Case of German Biotechnology”, Presented at the Japan Institute
for Labour Policy and Training, Tokyo, Japan, 26 March 2004.
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InnoRegio
An interim evaluation of the InnoRegio programme indicated positive
outcomes for the organisation of networks, albeit positive outcomes in terms of
innovation were less clear (Eickelpasch et al., 2002). Among the main findings it
was noted that during the phase of development, external moderation helped
significantly establish and foster the networks. Most companies think that they
are more capable than their competitors, and InnoRegio participants have this
self-assessment more often than companies in eastern Germany in general. In
InnoRegio networks, there is also a larger share of companies with capacities in
research and development than in eastern Germany in general.
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Bibliography
Cooke, Philip (2000), “Learning Commercialisation of Science: Biotechnology and the New
Economy Innovation System”, Prepared for the DRUID Summer 2000 Conference,
Aalborg University, Aalborg, Denmark, 15-16 June 2000.
Ernst, Holger and Nils Omland (2004), “Vitalisation of Industry through the Promotion
of Knowledge Intensive New firms: The Case of German Biotechnology”, Presented
at the Japan Institute for Labour Policy and Training, Tokyo, Japan, 26 March 2004.
European Commission (EC) and Enterprise Directorate-General (2005), Annual Innovation
Policy Trends and Appraisal Report: Germany 2004-2005.
EC and Enterprise Directorate-General (2004), Annual Innovation Policy Trends and
Appraisal Report: Germany 2003-04, http://trendchart.cordis.lu/.
Eickelpasch, Alexander et al. (2002), “The InnoRegio programme: A new way to
promote regional innovation networks – empirical results of the complementary
research”, Presented at the 42nd conference of the European Regional Science
Association, Dortmund, Germany, 27-31 August 2002.
Federal Ministry of Economics and Technology (www.bmwi.de).
Federal Ministry of Education and Research (www.bmbf.de).
OECD (2004), OECD Science, Technology and Industry Outlook 2004, OECD Publications, Paris.
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Competitive Regional Clusters
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PART II
PART II
Chapter 12
Italy
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Law 317
The original measure that gave an institutional framework for
policymaking targeting regional clusters was the Law 317 which was approved
on 25 September 1991. The main innovation of this law was its focus on SMEs
and, in particular, the scope that it gave for providing support to groups of small
firms rather than concentrating only on single, usually large firms. This was an
admission of the crucial importance of the industrial district model in the
Italian economy and recognized that such districts had, or potentially had,
different policy needs. Article 4 of the law was particularly significant because it
formalises the concept of “consortia” between small firms and gave prominence
to the provision of collective services for groups of firms (often known as “real
services”). Subsequent changes to this law have been adopted since 1991.
I n g e n eral, t h e l eg is la t ive fra m ework h a s b ee n ove r tak en by
decentralisation, with regions now in charge of increasingly broad areas of
innovation and enterprise policy. While this Law seems to have had only a
limited impact in practice for a variety of reasons, the objective of promoting
structural relations among firms and between firms and other economic
actors in a region remains a high priority and has emerged in other forms in
more recent national programmes.
Technological Districts
In the context of its efforts to improve the overall competitiveness of the
national economy, strengthen key industries and make publicly-funded R&D
more productive, the government is “mapping” national competence and
regional expertise. One of the key measures to come out of this mapping process,
and a key element of the National Research Plan (2005-7) are the Technological
Districts, which were endorsed by the Ministry for Education and Research
in 2002. This initiative has been characterised as an attempt to transfer the
industrial districts model to regions with strong high-technology industries.
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field of R&D and innovation – such as, business R&D expenditures, tertiary and
continuing education rates, EU and international patenting, among others. At the
same time, the Italian economy has some features that set it apart (and explain
at least some of these results). In particular, the economy is marked by a
predominance of small manufacturing enterprises, many of which are found in
the context of industrial districts, and there is a lack of large technology-based
enterprises which tends to depress business R&D statistics, reduce the number of
patents applied for, and influence the type of innovation (i.e., incremental process
innovation rather than technology-based innovation) (EC, 2005).
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1. Manufacturing industrialisation (total employees/total 30% more than the analogue national average
manufacturing industry employees)
2. Manufacturing industry entrepreneurial density Higher than the national average
(manufacturing local units /resident population)
3. Productive specialisation (specialised sectors 30% more than the analogue national average
employees/total employees)
4. Specialisation intensity (local units employees in specialised 30% more than the manufacturing employees
sectors) of the local labour system
5. Employees small enterprises in the specialised sector 50% more than the manufacturing employees
of the local labour system
Source: OECD (2001), OECD Territorial Reviews: Italy, OECD Publications, Paris.
Technological Districts. The main criteria adopted for the creation of new
technological districts are:
● The availability of a well-structured project incorporating extended
foresight studies in the chosen area of interest, the definition of vision,
mission and of the regulatory processes for the management, rules for the
protection and distribution of intellectual property.
● The coherence of the project with the strategic fields identified in the
guidelines of the national S&T policy.
● The participation in the district of public stakeholders (university and/or
research bodies) with the necessary experience in the field of interest and a
background of collaboration with industrial partners.
● The presence in the proposed district of private relevant stakeholders, for
industries with a long record of activity in the field, willing to establish a
joint collaboration with public actors, and whose activity is mainly located
in the same regional and local environment; the existence of a group of
individual leaders, with proven experience in the field, belonging to the
private and the public spheres.
Strategic fields include pharmaceuticals, nano-biotech products, medical/
agro and advanced diagnostic tools, bio-informatics and neurological diseases.
The full list of current Technological Districts is as follows: wireless applications
(Piedmont), molecular biomedicine (Friuli Venezia Giulia), biotechnologies
(Lombardy), ICT (Lombardy), advanced materials (Lombardy), polymeric
materials and compounds (Campania), advanced mechanics (Emilia Romagna),
microelectronics (Sicily), nanotechnologies (Veneto), integrated smart systems
(Liguria), aerospace technologies (Lazio), renewable energy and environmental
technologies (Trentino), ICT and security (Toscana), food security and quality
(Abruzzo), Agro-industry (Molise), Agro-industry (Puglia), High-tech (Puglia),
innovative technologies for seismic risks (Basilicata), Logistics (Calabria), Cultural
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Administrative boundaries
There are a number of examples of industrial districts in Italy being linked
to production sites in lower cost countries through co-ordinated action by
entrepreneurs and the public authorities. The Veneto region has established
transnational clusters with Romania and with Slovenian regions.
5. Instruments
The Technological Districts use a variety of instruments. Looking across the
Districts, the instruments can be grouped under the following main headings:
● Co-ordinating joint research projects involving HEI and private firms and
strengthening the R&D infrastructure (buying equipment or building new
facilities).
● Attracting and training researchers (e.g., establishing labs, scholarships or
training courses in the specialised field of the District).
● Supporting spin-offs and business expansion (including entrepreneurship
training, help with patenting, marketing business services for SMEs).
Industrial districts supported under Law 317 and similar measures tend
to emphasise network building and engagement of firms in collaborative
projects. Other areas of specific interest are collective service provision
(provided through intermediary organisations) and joint marketing and export
promotion activities.
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Bibliography
Calabrese, Giuseppi et al. (2003), “SMEs and Innovation: The Role of Regional Industrial
Policy in Italy”, Paper presented at the conference “Reinventing Regions in the
Global Economy”, sponsored by the Regional Studies Association held in Pisa, Italy,
12-15 April 2003.
Club dei Distritti Industriale (2006), quarterly newsletters.
European Commission (EC) and Enterprise Directorate-General (2005), Annual Innovation
Policy Trends and Appraisal Report: Italy 2004-2005.
EC and Enterprise Directorate-General (2006), Annual Innovation Policy Trends and
Appraisal Report: Italy 2006.
OECD (2001), OECD Territorial Reviews: Italy, OECD Publications, Paris.
OECD (2004), OECD Science, Technology and Industry Outlook 2004, OECD Publications, Paris.
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ISBN 978-92-64-03182-1
OECD Reviews of Regional Innovation
Competitive Regional Clusters
© OECD 2007
PART II
PART II
Chapter 13
Japan
This case study reviews two explicit cluster programmes in Japan. The
Japanese Knowledge Clusters are centred around key universities and
seek to promote greater university-industry collaboration. The
Industrial Cluster programme supports SMEs and research links in a
range of regional area types through business incubation and support
services with a strong focus on effective relationships among industry,
university and government.
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regional innovation and development. The Second Science and Technology Basic
Plan, established by a Cabinet Decision in March 2001, specifically advocated the
creation of Knowledge Clusters in regions.
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MEXT
● 18 small urban regions (cities).
● JPY 500 million per year, over five years, for each nominated region.
● The total annual budget is JPY 9 billion in FY2004 for the 18 regions.
METI
● 19 large regions.
● JPY 680 million in FY2004, to support the private cluster promoting
organisations.
● In addition, related schemes including R&D support and schemes to
strengthen incubation facilities under METI and its affiliated organisations
in the amount of roughly JPY 48 billion for FY2004, although they are not
solely earmarked for the Industrial Cluster programme, are available for the
firms and universities participating in the 19 projects (METI).
With respect to the METI programme, an interesting feature is the
“evolutionary” nature of the approach, as implied in the evaluation by the
Industrial Cluster Study Group report which sets out a framework for the
development of the networks over time (METI, 2005). This suggests a longer
time horizon than is usually the case in cluster programmes.
1st term (2001-05) Start-up period Based on the current state of and policy needs for clusters,
of an industrial cluster about 20 projects are started as the Industrial Cluster projects mainly led
by the central government to form the “network where each face is visible”,
a basis for industrial clusters, in co-operation with clusters which are
developed independently by local governments.
2nd term (2006-10) Growth period Networking promotion is continued and specific businesses are developed.
of an industrial cluster At the same time, management innovation of companies and the creation
of ventures are promoted. If necessary, projects are revised and new
projects are prepared flexibly.
3rd term (2011-20) Self-sustaining Networking and development of specific businesses are further promoted.
developing period of an industrial Financial independence of industrial cluster activities is encouraged
cluster for the self-sustaining development of the clusters.
Source: Ministry of Economy, Trade and Industry (METI) (2005), “Report on Industrial Cluster
Programme”, evaluation report submitted to METI by the Industrial Cluster Study Group.
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Type A: Metropolitan areas Each of the three metropolitan areas – Kanto, Chubu-Tokai, and Kinki – form a virtual mega
– revitalisation of diverse cluster including a wide range of fields from automobile, digital appliances and mechatronics
cluster with strong existing to bio and nano-industries.
capacity [Examples of characteristics of goal setting]
Focused on revitalisation of existing companies. Support is provided mainly for levels near
commercialisation.
Collaboration with large companies is prominent feature. Collaboration at municipality level
is also common.
Type B: Science These clusters are based on industrialisation of technology regardless of existing cluster
and technology-centred structure. High-level universities and public research institutes play a central role in these
cluster clusters.
[Examples of characteristics of goal setting]
Technology transfer, support for firm start-ups, and business incubation are areas of focus.
R&D absorbs a great percentage of support, and there is a big time lag between support
and the increase in sales.
Type C: Niche clusters Some smaller regional agglomerations already have some clustering practices present and are
focused around a limited number of niche activities. Policy is focused on supporting existing
networks.
[Examples of characteristics of goal setting]
Niche fields are often targeted. Market share is limited.
Type D: Network formation Industrial agglomeration is thin. Areas where agglomeration bases are distant from each
between mini- clusters other and have only mini clusters; there is no broad-based cluster.
[Examples of characteristics of goal setting]
Each cluster is small-scale and needs time to develop.
Network formation between clusters also needs time.
Source: Ministry of Economy, Trade and Industry (METI) (2005), “Report on Industrial Cluster Programme”,
evaluation report submitted to METI by the Industrial Cluster Study Group.
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Administrative boundaries
The clusters that were selected tend to conform to administrative
(prefectural) boundaries.
5. Instruments
In terms of instruments, the MEXT programme emphasises support for
specific basic and more applied research projects and for building networks to
undertake such research. In the METI programme, there is a strong emphasis on
facilitating co-ordination and collaboration, joint marketing, seminars and
training, etc. In other words, “soft” instruments that build network and
co-operative behaviour are supported. The measure can be split into three main
categories: 1) giving support to exchanges and co-operation between industry,
academia, and government; 2) giving support to the development of technologies
for practical use based on regional characteristics; and 3) establishment of
facilities to provide training to entrepreneurs. Examples of support provided
through the METI Industrial Cluster programme are described in Table 13.3.
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Source: Ministry of Economy, Trade and Industry (METI) (2005), “Report on Industrial Cluster
Programme”, evaluation report submitted to METI by the Industrial Cluster Study Group.
Notes
1. In 2004, Japan’s national universities – under central government control for more
than a century – were reformed as independent administrative (public) corporations.
Prefectural universities will undergo a similar re-organisation in 2005. Selective
university mergers to create economies of scale and other changes in academic
incentive and evaluation systems are also under way. Universities are also rapidly
establishing Technology Licensing Offices, incubators, collaborative industry-
research centers, and other programs to promote research commercialisation and
regional development.
2. Japan has a long-established and extensive system of small business support. This
system provides an array of services including information supply, business and
machinery credit insurance and loans, tax credits, R&D subsidies, management
training, support for new business creation, assistance with technical upgrading
and internationalisation, mutual insurance schemes, assistance with succession,
mergers, and the avoidance of bankruptcy, and support for SMEs in specific
industries (for example, in textiles). Administratively, the system is complex.
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II.13. JAPAN
Bibliography
Kitagawa, Fumi (2007), “The Regionalisation of Science and Innovation Governance in
Japan?”, Regional Studies: Special Edition, Regional Governance and Science Policy,
forthcoming.
Kodama, Toshihiro (2004), “Cluster Promoting Initiatives in Japan”, presented at the
conference Innovation and Regional Development sponsored by the OECD, EU Erik
Network and the Tuscany Region, Florence, Italy, November 2004.
Ministry of Economy, Trade and Industry (METI) (2005), “Report on Industrial Cluster
Programme”, evaluation report submitted to METI by the Industrial Cluster Study
Group.
OECD (2004), OECD Territorial Reviews: Japan, OECD Publications, Paris.
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ANNEX 13.A1
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II.13.
JAPAN
Figure 13.A1.1. Map of Japan’s Industrial Cluster programme
19 projects
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Department of Economy, Trade and Industry, Hokkaido Bureau of Economy, Tohoku Bureau of Economy, Trade and Industry
Okinawa General Bureau Trade and Industry • An Industry Promotion Project for Information
• Okinawa Industry Promotion Project • Hokkaido Super Cluster Promotion Technology, Life Science and Cutting-edge
Information/health/environmental/processing trade fields: Project Manufacturing
About 150 companies and 2 universities Biotechnology/IT fields: About IT/Health/Manufacturing fields: About 230 companies
300 companies and 16 universities and 21 universities
• An industry promotion project
for a recycling-oriented society
Environmental/Energy fields: About 280 companies
Chugoku Bureau of Economy, Trade and Industry and 20 universities
Source: Government of Japan, Regional Economy and Industry Group of the Ministry of Economy, Trade and Industry.
II.13. JAPAN
Kyoto
Hiroshima [Life Sciences] [Nanotechnology] Gifu-Ogaki [Life Sciences]
Nagoya [Nanotechnology]
Ube [Life Sciences]
Hamamatsu
[IT, Life Sciences]
Source: Government of Japan, Ministry of Education, Culture, Sports, Science and Technology.
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PART II
PART II
Chapter 14
Korea
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would predict given its level of R&D intensity. Sources of this under-performance
include the need to take into greater account the business sector in the design of
linkages with research as well as university incentives for R&D (OECD, 2005a). Per
the EU Trend Charts, the science-industry links are considered very weak in Korea
despite these strong technology and innovation investments (EC, 2005).
Regional Innovation
Agencies
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* For more information on this topic, see several territorial reviews on Korea, Seoul
and Busan by the OECD as sourced in the bibliography.
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1st Plan 2004-08 Create and expand ● Set up regional innovation system
innovation ● Promote an innovation cluster
● Transfer public organisations to local areas
2nd Plan 2009-13 Establishment ● Promote the next generation growth engine industry as a key sector
of innovation ● Move into the world class innovative cluster
● Construct a new administrative capital complex
3rd Plan 2014-18 Advanced ● Enhance the regional innovation system
innovation ● Compete with world class clusters
● Maximise the national growth potential
Source: www.pcbnd.go.kr.
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II.14. KOREA
Source: www.mocie.go.kr.
All local governments must also now identify their strategic industries. The
first round of this process took place 2000-03, and a second round in 2004-08.
These plans are used to solicit funds from the national government. Another
industrial policy used in Korea is that of free economic zones with major tax
breaks for large foreign investors to attract FDI. Three opened in 2003: Incheon,
Gwangyang and Busan-Jinhae. Finally, there are a number of services for
enterprise support, but one of the major gaps has been the lack of services to
encourage inter-firm linkages (Jeong and Kim, 2002).
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Total 29 702
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Source: http://english.e-cluster.net/.
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Administrative boundaries
The selection criteria and public support in general are based on pre-existing
administrative boundaries given the location of industrial complexes but do not
always take into account functional economic regions. The industrial clusters are
also building up strong relationships with global cluster organisations abroad,
such as SEEDA in England and TAMA in Japan.
5. Instruments
Korea’s policies to support industrial complexes tend to use instruments
such as firm subsidies and investment in hard infrastructure. There has also
been increasing emphasis on bringing research, industry and universities
together to better capitalise on R&D investments. In general, initiatives in
Korea are public instead of private-led. Please refer to the Annex 14.A1 for
more details on the specific Innovative Cluster Cities plans.
● Identification and benchmarking: Korea benchmarks the performance of its
national industrial clusters on an international basis, and these Cluster
Cities are an important component of national performance.
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innovation cluster related policies. Second, they suggest that policies should
strengthen “soft” support and secondary functions (value chain) including
specialised services such as information, consulting and financing. A third
recommendation concerns the need to bring in business-oriented leadership in
these arrangements. A final conclusion is to help techno parks be more outward
focused, instead of only inward, in terms of resources (Hong et al., 2003).
Bibliography
European Commission (EC) and Enterprise Directorate General (2005), “Annual
Innovation Policy Trends Report for Japan, China, Korea, Taiwan, Singapore, India,
Malaysia, Thailand, Indonesia”.
Hong, Sung Bum, Deok Soon Yim and Ki Kook Kim of STEPI (Science and Technology
Policy Institute) (2003), abstract “Characteristics and Types of Chinese Innovation
Clusters in Comparison with Korean Cases”.
Hong, Yoo Soo (2005), “The Third Generation of NIS and the Case of Korea”, KIEP Korea,
Paper presented at the ASIALICS Conference, 19 April 2005.
Jeong, Jun Ho and Kim, Sun Bae (2002), “Boosting Enterprise-Support Services for Regional
Industrial Development in Korea”, Journal of the Korean Geographical Society, Vol. 37,
No. 5 (Series No. 39), December.
Ministry of Commerce, Industry and Energy (http://english.mocie.go.kr/, http://english.e-
cluster.net/).
OECD (2002), OECD Territorial Reviews: Korea, OECD Publications, Paris.
OECD (2004), OECD Territorial Reviews: Busan, Korea, OECD Publications, Paris.
OECD (2005a), OECD Economic Surveys: Korea, Vol. 2005/21, November 2005, Supplement
No. 3, OECD Publications, Paris.
OECD (2005b), OECD Territorial Reviews: Seoul, Korea, OECD Publications, Paris.
Park, Hyung Jun and Jin-ki Hong (2005), Industrial Cluster Policies in Korea, Institute for
Industrial Economics and Trade.
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ANNEX 14.A1
Gumi Digital ● Spread technical human resource training program: model – Youngjin College (Compose and manage
Electronics educational- industrial co-operation system with enterprises within the complex and nearby universities;
Induce early spreading of the model Gyungbuk University and Youngjin College)
● Create accumulated area for digital electronics and information technology: Regional promotion
business (Support business incubation and construct co-research equipments)
● Recommending establishment of Gumi Industry Support Examination Analysis Evaluation Center
● Promoting establishment of Electronics Components Materials Innovation Center
● Promoting construction of Geumhyeong Innovation Technology Support Center
● Supporting bottleneck technology of the small and medium enterprises
● Promoting construction of Gumi General Support Center
● Managing IT field forums with technical advice from University professors
● Publicizing human resource applications and school training equipments
● Accumulating of small and medium venture enterprise of display and mobile in Gumi
Complex No. 4
Changwon Advanced ● Promote development of the core appliances technology of the next generation (Focus on the core
Appliance technology field such as NC engineering work, ultra-high manufacturing technology, etc.)
Cluster ● Construct innovated network of appliance components enterprises mainly from small and medium
enterprises (Fixed R&D through conferencing with universities/research labs/large enterprises)
● Provide general service such as human resource training, market information, etc.
● Construct immediate solution system for bottleneck (Ultra high speed technology clinic)
● Supporting enterprise-initiated technical human resource training such as Employment
Reservation System
● Expanding support service for small and medium enterprises
● Creating Inno-core Park based on foundation of R&D and manufacture of preproduction
● Accumulating information, S/W, various equipment possessed by Regional Innovation
Organisation
● Employing and train technical equipment co-ordinator (Intermediate educational-industrial
co-operation, technology guide)
● Training technical ability through inviting foreign technical experts
● Support human resource of small and medium enterprises in studying abroad
Ulsan Automotive ● Strengthen co-R&D between universities, research labs and components manufacturers (Organize
Components Technology Research Association to strengthen co-operation in Educational-Industrial R&D, M&A;
Consulting, technology transfer and business incubation establishment; Activate between various
components manufacturing enterprises)
● Construct General Support System to modulise automotive components through formation business
of Auto Valley: Automotive Components Complex (160 000 pyong), Modulisation Complex
(250 000 pyong), Co-construction of Equipments (Automotive Components Innovation Center)
● Settle co-operative Labour and Management relationship
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Banwol Advanced ● Create mini cluster of component material of advanced fields – Promote advanced component
Skhwa Component material cluster such as Nano Material Analysis Support Center, precision photonics cluster based
Material on advanced enterprises and Korea Polytechnic University – Increase individual new product
development ability from R&D to mass-manufacturing through connection of component material
industry and manufacturing equipment industry
● Construct component material network (Construct human training-centred educational-industrial
cluster by connecting with Hanyang University, Saenggiwon, Gyunggi TP)
● Increase locations for advanced enterprises
● Environmentally friendly eco-industrial complex
● Establishing Model Design Center in Korea Polytechnic University
● Establishing Model Nano Analysis Support Center in Korea Polytechnic University
● Establishing Precision Photonics Model Center in Korea Polytechnic University
● Developing and manage Intern Training Program
● Providing location by creating model compound rental complex
● Establishing Model Regional Innovation Center in Korea Polytechnic University
Gwangju Photonics ● Construct photonics technology development network
Industry ❖ Global standard examination, certification and evaluation system enforced by Korea Photonics
Technology Institute
❖ Found LED relevant special school subject to educate expert human resource (in Jeonnam
University)
❖ Educational-industrial infra shared (TIC, RRC, etc.) by attracting educational-industrial
organisations to the complex (Jeonnam University, Chosun University, etc.)
❖ Support in technology development and manufacturing improvement for each enterprise
through “Private Technology Treatment” system
● Secure spontaneous ability of components manufacturing enterprises by supporting business
incubation establishment
● Possess technology to attract leading enterprises
● Contracted with Chosun University Educational-industrial Co-operation Association in moving
into the complex
● Attracted Korea Institute of Industrial Technology, Gwangju Institute
● Composing Photonics Industry Association for inspecting and evaluating photonics industry
● Photonics Internet Research Association, Advanced Component Industry Research Association
● Introduced 543 items of 327 types of research equipments
● Developed LED field with establishment of LED Valley in the cluster
● Founded LED relevant school subject in Jeonnam University
● Began composing and distributing Gunsan National Industrial Complex
● Composition in progress of automobiles components industry accumulated complex
● Constructing Automotive Components Industrial Innovation Center
● Constructing guesthouse
● Organized and managing Investment Promotion Division Organisation
● Amending Gunsan Investment Promotion Regulations
Wonju Advanced ● Attract leading enterprises and create new business – Co-operate with ODM and global enterprises
Medical such as GE, etc. – Develop Donghwa Agriculture Industry Complex to be designated as a complex
Industry exclusive for foreigners – Develop core technology of medical appliances for both western and
Chinese medicine, fusing silver industry and IT industry – Amend medical law regarding promotion
for Tele-Med industry and develop medical appliances for both western and Chinese medicine
● Construct manufacturing foundation for medical appliances
● Construct medical appliances support network such as Wonju Medical Industry Foundation, etc.
● Completed construction of Medical Appliances Production Manufacturing Facilities
● Constructed and managing advanced Medical Appliances Techno Tower
● Constructing leased factory for attracting medical appliances enterprises.
● Preparing equipments for Medical Engineering Education Center and training expert human
resource
● Constructing Advanced Medical Appliance Venture Center Promoting establishment of Medical
Appliances Manufacturing Technology Research Labs and Medical Appliances
(Examination Organisation)
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PART II
PART II
Chapter 15
Netherlands
This case study covers two approaches in the Netherlands that have
a cluster-based component. Peaks in the Delta is the nation’s new
regional policy that promotes economic development in regions, with
funds channeled in part to clusters selected by these regions. The Key
Innovation Areas are part of the nation’s innovation strategy but
also have a strong regional impact. The goal of this approach is to
strengthen those areas of competence important to the Netherlands
with a strong role for innovation.
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in 2003. While the growth rate is now improving (between 2% to 3% for 2006), the
country took several years to recover from this downturn. The high general level
of productivity (GDP per hour worked) in the Netherlands is tempered by one of
the lowest growth rates in labour productivity (1.1% for the period 1995-2000 and
0.9% for the period 1995-2005). As a gateway to Europe and an economy very open
to international trade, the Netherlands has a notable share of global trade and a
strong capacity to attract FDI. The Netherlands ranked sixth in attracting FDI
among OECD countries from the period 1996-2005, and its relative position when
adjusted for GDP is even stronger (OECD, 2007).
Assessment of the innovation system shows some strengths in research
quality but average innovation performance and several weaknesses. Strengths
include the quality of research, a high number of patents, a relatively high level of
public co-financing for applied research by the business sector, good use of ICT,
and a high number of knowledge workers. Weaknesses include lagging R&D
intensity of Dutch firms (1% versus an OECD average of 1.5%) and a growing
shortage of science related knowledge workers, as well insufficiencies in
innovative entrepreneurship, the use of scientific research and the interaction
between knowledge infrastructure with firms (EZ, 2006a). The below average R&D
intensity is attributable approximately 60% due to the sectoral specialisation of
Dutch industry (less R&D intensive than in many other countries) and 40% by
other factors, such as the low rate of foreign R&D funds despite the openness of
the economy (OECD, 2006). Half of firm funding is concentrated in seven
multinationals but that share has been on the decline in favour of greater
diversification. Of firm R&D spending, manufacturing firms are responsible for
the predominant share at 77%, albeit this includes a large share of electrical and
optical equipment (EZ, 2006a).
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• Sector Councils
Government • Strategic Advisory Councils
• Innovation Platform (led by Prime Minister,
18 high-level members)
• AWT: Advisory Council for Science and Technology Policy
• Council on Science, Technology and Information Policy (RWTI)
Dutch Organisation
SenterNovem
for Scientific
(Innovation Agency)
Research (NWO)
Provincial Regional
12 Provincial
Development
Governments
Authorities
Source: Simplified version, from EC and Enterprise Directorate-General (2005), Annual Innovation Policy
Trends and Appraisal Report: The Netherlands 2004-05.
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The programmes flowing from this innovation policy can be broken out
into a basic package of general support to firms and a programme package that
is more tailored on specific areas. The basic package for entrepreneurs includes
various support mechanisms, notably to SMEs, through tax schemes, vouchers
and advice. Part of this general approach is to reform the instruments available
to be more flexible, tailored and focused. Financial incentives for firms to
innovate accounted for 47% of government funds for innovation in 2006. The
programme package is designed to focus on a more limited set of issues, better
link policy and implementation, increase public/private collaboration, make
room for tailored approaches and allow for varied approach by policy area
(EZ, 2006a). The Dutch advisory council on innovation policy also proposed that
policy be more directed to key sectors. A relatively large part of the innovation
budget (around 50%) has therefore been directed at specific enterprises which
fit this category.
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Notes: In 2005, the Ministry of Economic Affairs will allocate funding for the economy policy
component to the major cities for the entire 2005-09 covenant period in a single payment. Funding for
the IPR Central programme has not been confirmed beyond 2006 and is therefore to be determined.
IPR = Investment Subsidy Scheme; ERDF = European Regional Development Fund.
Source: Ministry of Economic Affairs (EZ), Government of the Netherlands (2004), Peaks in the Delta:
Regional Economic Perspectives.
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Administrative boundaries
Peaks in the Delta: Financing will be channelled through these six regional
demarcations, albeit within a region the cluster may span municipal and
provincial boundaries.
Key Innovation Areas: Given the national perspective on these key areas,
there are no a priori administrative boundaries. One active area for trans-
national co-operation is the triangle of Eindhoven (Netherlands), Aachen
(Germany) and Leuven (Belgium). This transational region is working to
develop an “innovation eco-system” and their several joint actions should
contribute to the cluster supported under the Point One programme.
5. Instruments
The two policy approaches to support regional specialisation leave open
the possibility of a range of instruments depending on the needs of the
particular cluster.
● Identification and benchmarking: For Peaks in the Delta, the identification
process for priority clusters was up to the regional Programme Commission.
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The national Key Innovation Areas of the innovation strategy were selected
based on the role of innovation, internationally strong performance and
commitment of stakeholders.
● Engagement of actors: The innovation programme approach seeks to
formalise the engagement of actors in a cluster initiative.
● Government service delivery: While there is not an explicit change in
government service delivery, both programmes are supporting a more
cluster-oriented approach. This principal is behind the idea in the 2004
Industry Memorandum “Heart for Industry” to focus on groups of firms and
sectors to identify how policy can address obstacles for economic growth.
The Peaks in the Delta approach has also resulted in a restructuring of the
internal organisation of the Ministry of Economic Affairs along geographic,
albeit not specifically cluster, lines.
● Skilled HR: Improving the size of the skilled labour pool in general is a concern
for the country given the current deficit of skilled Dutch labour in key fields.
This is part of the nation’s overall approach to innovation but is not a key
component of the newly forming cluster initiatives. These clusters may
promote more cluster-specific strategies in the context of their individual
programmes.
● Entrepreneurship and innovation: Supporting innovation is an explicit goal for
the Key Innovation Areas of the innovation policy. The regional programme
does not specifically address these areas but is more focused on industrial
parks and bottlenecks for the development of these areas.
● Resource allocation and investment (including branding): The labelling in both
cases is designed to increase visibility and support of these priority clusters.
With the focus coming from the Ministry of Economic Affairs, it does not
necessarily result in other ministries redirecting their existing funds
towards these selected cluster groups.
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Bibliography
European Commission (EC) and Enterprise Directorate-General (2003), Thematic Report:
Cluster Policies, Brussels.
EC and Enterprise Directorate-General (2005), Annual Innovation Policy Trends and Appraisal
Report: The Netherlands 2004-2005.
EC and Enterprise Directorate-General (2006), “Netherlands: Reviewed innovation
policy mix gets going”, TrendChart Newsletter, June 2006.
Ministry of Economic Affairs (EZ), Government of the Netherlands (2004), Peaks in the
Delta: Regional Economic Perspectives.
Ministry of Economic Affairs (EZ) and Government of the Netherlands (2006a), Science,
Technology and Innovation in the Netherlands: Policies, facts and figures 2006.
Ministry of Economic Affairs (EZ) and Government of the Netherlands (2006b),
“Innovation policy in the Netherlands”, presentation by Hans de Groene,
26 January 2006.
OECD (2006), OECD Economic Surveys: Netherlands, OECD Publications, Paris.
OECD (2007), OECD Territorial Reviews: Randstad, Netherlands, OECD Publications, Paris.
Severijns, Jean (2006), “Cluster Policy in the Netherlands and Surrounding Areas: Strategic
Innovation as Multi-Dimensional Cluster Model”, presented at the Summer
University conference for Local production systems, clusters and competitiveness
centres, Bordeaux, France, 11-13 September 2006.
Yuill, Douglas (2006), “Policy Developments in the Netherlands”, in Regional Policy
Developments in the Member States and Norway: Country Reviews 2005-06, EoRPA
Paper 06/2, European Policies Research Centre.
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ANNEX 15.A1
Wageningen:
food and agricultural
research
Rotterdam: port
and logistics, chemicals;
Delft: TNO, DSM;
Den Haag: chemical
industry (Shell),
food (Unilever), flowers,
Metal Research Eindhoven: heart
Institute of manufacturing industry;
Philips, ASML, DAF, TNO;
Dutch Polymer Institute,
Katalysis Research School
Note: Areas listed above do not map exactly to the regional categories of the Peaks in the Delta
programme but indicate some of the nation’s key clusters.
Source: Ministry of Economic Affairs (EZ), Government of the Netherlands (2006b), “Innovation policy
in the Netherlands”, presentation by Hans de Groene 26 January 2006.
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PART II
PART II
Chapter 16
Norway
267
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Government
Government’s Government’s
Cabinet
Research Board Regional Board
Ministry
Other Ministries Ministry Ministry
of Local Government
(may finance R&D, of Education of Trade
and Regional
innovation projects) and Research and Industry
Development
GIEK County
NOKUT Authorities
Research
Institutes
Innovation Norway
Research Council
of Norway
Industrial Development
Corporation (SIVA)
Coordinating
Committee
County
Authorities
Programme
Secretariat
NCE/Arena
Source: Modified from EC and Enterprise Directorate-General (2006), Annual Innovation Policy Trends and
Appraisal Report: Norway 2006.
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counties, including for matters of innovation policy. In fact, the regional offices
of Innovation Norway are mainly funded by the counties. The most prominent
aspects of Norway’s new regional strategy are: a stronger emphasis on regions/
centres that show growth potential, prioritising measures to strengthen
innovation and firms and greater decentralisation to regions. The Arena and
NCE programmes both seek to promote coherence across levels of government
by requiring that these national programme participants be linked with regional
development plans and regional actors.
A 2004/5 White Paper on regional policy emphasized regional development,
innovation and internationalisation. It suggested that the country’s regionally
focused innovation policy should: support local opportunities and remove
local barriers to innovation, exploit regional competitive advantages, promote
co-operation at the local level across different actors (firms, government, and
research) and strengthen knowledge about technology, products and markets.
There is a strong accent on the need for regional specialisation as a national
policy approach. In 2006, the Government declared that there will be a regional
reform for 2010 to replace county councils with new regional entities.
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Administrative boundaries
For both Arena and NCE, the scale of a project is not constrained by
administrative boundaries and may span several counties (regional units).
5. Instruments
Both programmes are focussed mainly on the engagement of actors
through network development with a goal to improve innovation. For NCE, up
to 50% of funding is for financial support (process management, network
building, idea and project development, analysis and strategy processes, and
communication and branding). The other instruments include professional
support (networks between NCE projects, joint development projects and
learning activities, linkage to international networks and marketing).
● Identification and benchmarking: For the NCE projects a standardised baseline
study is carried out, funded by the programme. In addition, most of the
Arena projects are based on cluster analyses in different forms, and several
projects are supported by benchmarking and other research projects.
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● Engagement of actors: This is the primary goal of the Arena programme’s initial
phases as items that may be funded include project management,
consultancy services, and travel and meeting activities. It is also strongly
supported within the NCE programme to develop collaborative projects
such as process management, networking building, analysis and strategy
processes and concept/project development. The Arena programme plays in
part a role of engaging actors who may then graduate to the NCE programme.
● Government service delivery: Greater co-ordination among public actors in
support of clusters is an implicit goal of both programmes as they are
co-funded and co-managed across different entities. With the Arena
programme, there is an explicit goal to have more proactive and better
co-ordinated involvement of the public sector. Additionally, initiatives under
both programmes must be in line with regional development plans. The two
programmes, and especially the NCE programme, also have a strong learning
component which is hoped will provide information to improve government
programmes. NCEs are required to incorporate the offers from relevant other
national programmes when applicable, thereby serving a co-ordination role
to channel funding from various national programmes.
● Skilled HR: One of the goals of the Arena programme is to develop educational
programmes better adapted to the needs of the business community, so this
is an option that a cluster may or may not pursue. While skilled HR is a goal
within the country’s innovation strategy, it is not a primary goal of the NCE
programme but is a possibility.
● Entrepreneurship and innovation: There is not an accent specifically on
entrepreneurship and the development of spin-offs in the “core” cluster
programmes. Support specifically to spin-offs through incubators is offered
by a separate programme from the Industrial Development Corporation,
and this entity is a co-manager of the core cluster programmes. Innovation
is a primary goal of both programmes. For example, the NCE programme
seeks to promote innovation through joint projects related to a particular
type of technology or expertise, a limited business sector, or co-operation
within an efficient value chain.
● Resource allocation and investment (including branding): Arena-funded
initiatives are incorporated into regional development plans and involve the
county authorities as key partners in the network. This serves to direct
resources from different levels of government to the same clusters. The NCE
programme has a clear branding strategy for marketing those clusters with
the strongest international potential as well as links with regional bodies
for funding.
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Criteria
Selection
for evaluation
criteria
after 3 years
NCE-project
… 10
Year 1 2 3 4 5 6
NCE
Baseline Self External
programme
assessment evaluation evaluation
evaluation
Annual
Annual project
programme
reports
report
Report to
Ministries
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Bibliography
European Commission (EC) and Enterprise Directorate-General (2006), Annual
Innovation Policy Trends and Appraisal Report: Norway 2006, http://trendchart.cordis.lu/.
OECD (2005), OECD Economic Surveys: Norway, Vol. 2005/17, October 2005, OECD
Publications, Paris.
Senneseth, Knut and Olav Bardalen (2005), “Evaluation as a policy learning tool – three
generations of Norwegian cluster programmes”, Presentation made at the 8th Annual
Conference of the Competitiveness Institute, Hong Kong, 8-11 November 2005.
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ANNEX 16.A1
Former projects:
• The Wood Pilot Glåmdal
• Lillestrøm Knowledge City
MedIT Nor • Innovation Møre
• Bluelight
• Inno-Tech
Arena automotive
• BIOINN
• Innovation Mid-Norway
Innovative Fjord tourism • Biocluster North
Creative industry
• Arena Leight Metals
Marine West
Oil and gas
suppliers Mobile communication
Natural gas
Food cluster Plastic cluster Østfold
NODE
Innovative mountain tourism
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NCE Instrumentation
NCE Maritime
Note: Four more clusters are expected to be added by 2008 for a total of 10.
Source: Government of Norway, Innovation Norway.
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PART II
PART II
Chapter 17
281
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the central government (Aranguren et al., 2003). Within the Basque Country,
there are three historical provinces that have certain policy mandates and
taxing authority.
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Administrative boundaries
The clusters served are not constrained to any sub-regional districts.
Trans-national co-operation is not a focus of the programme.
5. Instruments
The instruments promoted by the Competitiveness programme are centred
on engaging actors and promoting strategic planning and competitiveness
assessments for the clusters. They may as a cluster pursue projects sponsored by
other departments or agencies that offer additional instruments, such as those
related to technology.
● Identification and benchmarking: This, along with engaging actors, is one of the
core sets of instruments. The focus is on the competitiveness challenges of a
particular sector.
● Engagement of actors: The programme seeks to use cluster initiatives and a
strong co-operation with the public sector to engage actors not only within
a particular cluster but also across clusters on key themes. Starting in 2001,
cluster initiatives have had to submit strategic plans with explicit attention
to three horizontal themes. As a result of their collaboration, several
clusters have created an Export Consortia as well as inter-cluster projects.
● Government service delivery: The designation as a priority cluster may
promote greater support by other public and private entities. For example,
the region’s technology plans include input from the cluster-specific
technology plans which has also reoriented technology centres to be more
focused on priority clusters.
● Skilled HR: Some of the clusters may be involved to a greater or lesser extent
in sector specific training programmes but these are not instruments
typically funded by the programme directly.
● Entrepreneurship and innovation: The programme is not designed to explicitly
support the creation of new firms. The strategic plans for the clusters and
their horizontal theme groups may highlight innovation needs for the
cluster. Collaboration may occur with Basque technology centres on a case-
by-case basis. The programme is not designed to fund directly significant
innovation projects.
● Resource allocation and investment (including branding): The designation as a
priority cluster may promote greater support by other public and private
entities but this is not an explicit component of the programme.
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Bibliography
Ahedo Santisteban, Manu (2006), “Business Systems and Cluster Policies in the Basque
Country and Catalonia (1990-2004)”, European Urban and Regional Studies, Vol. 13,
No. 1, pp. 25-39.
Aranguren, Mari Jose et al. (2003), “Cluster versus spatial network supporting policies:
learning from experiences in the Basque Country”, Presentation to the Workshop
on clusters and spatial networks, Universidad Rovira I Virgili (Reus).
Aranguren, Mari Jose and Itziar Navarro (2003), “La política de clusters en la Comunidad
Autonoma del País Vasco: una primera valoración” (Cluster Policy in the Basque
Country: a First Assessment), Ekonomiaz, 53 (2 Cuatrimestre).
Esteban, Juan Manuel (2005), “Basque Country Cluster Policy: A brief outlook”,
Presented in Brussels, Belgium, October 2005.
European Commission (EC) and Enterprise Directorate-General (2005), Annual
Innovation Policy Trends and Appraisal Report: Spain 2004-2005.
Poncela, Maria (2006), Presentation at the conference Innovation and Regional
Development sponsored by the OECD, EU Erik Network and the Tuscany Region,
Florence, Italy, November 2004.
Porter, Michael (2002), “Basque Competitiveness”, PowerPoint presented in Bilbao
Spain, 18 April 2002.
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II.17. SPAIN: THE BASQUE COUNTRY
Taylor, Sandra and Philip Raines (2001), “Learning to Let Go: The Role of the Public Sector
in Cluster Building in the Basque Country and Scotland”, Regional Industrial Policy
Research Paper #48, European Policies Research Centre, University of Strathclyde,
September.
Torres, K. and Arnoud Lagendijk (2000), “Industrial policy in the Basque Country”, in
A. Giunta et al. edition, Restructuring Industry and Territory: the Experience of Europe’s
Regions TSP, London, pp. 143-161.
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ANNEX 17.A1
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Source: Ahedo Santisteban, Manu (2006), “Business Systems and Cluster Policies in the Basque Country
and Catalonia (1990-2004)”, European Urban and Regional Studies, Vol. 13, No. 1, pp. 25-39 and Esteban,
Juan Manuel (2005), “Basque Country Cluster Policy: A brief outlook”, Presented in Brussels, Belgium,
October 2005, with updates.
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PART II
PART II
Chapter 18
Sweden
295
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Government Offices
VINN Excellence
Visanu Program
VINNVÄXT Centers
Regional Cluster Program (2002-05)
Program (first round began 1995)
(began late 2005)
(began 2001)
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There is also a strong link between VINNVÄXT, Visanu and the new
Regional Cluster Program in terms of joint development projects and exchange
of personnel.
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innovation approach. The Visanu program is a joint program with VINNOVA, but
is not a core programme of the innovation policy. In 2004, Sweden developed a
national strategy entitled Innovative Sweden through its new Innovation Policy
Council. The strategy born from both the Ministry of Education and the Ministry
of Industry seeks to develop an innovative social climate through four categories
of actions: a knowledge base for innovation, innovative trade and industry,
innovative public investment and innovative people.
Another important element of Sweden’s STP policy includes the Centres
of Expertise. The first ten-year round from 1995-2005 went to 30 centres (now
28 centres located in eight universities). The selection process elicited a strong
response, as initially 300 centres applied. In 2003 another round was proposed
under the new title of VINN Excellence Centres. Four new centres (including
the areas of transport and working life) were financed. A new call for proposals
aims to establish 15 VINN Excellence related to VINNOVA’S target areas.
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Start-ups 848 91
Source: Government of Sweden (Government Bill 2005/06:1, expense categories 13, 19 and 24).
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ProcessIT Innovations Luileå/Umeå Combining companies from the ICT sector with manufacturing
companies and researchers, both in the academy and the
business community (ex. mining, steel and paper industries)
Biotechnology West of Sweden Developing tools, platforms and processes for transforming
and Göteburg research in the area of biomaterial to applications
and innovations in two clusters: a) biomaterial and cell therapy;
and b) treatment of cardiovascular metabolism such as diabetes,
obesity and strokes
Triple Steelix Bergslagen Increasing competitiveness within the steel industry
by co-operating in R&D of new products, services and new
companies (ex. competencies in materials, steel manufacture,
nanotechnology, industrial IT, environment and energy
efficiency)
Fiber Optic Valley Hudiksvall Creation of a new centre for state-of-the-art broadband solutions
by taking advantage of business networks and a close
collaboration with researchers
The New Tools of Life Linköping/Norrköping Developing of individually designed products for best possible
health. This includes new solutions for the health care sector
as well as innovations in the market for health-related products
Uppsala Bio Uppsala Internationally recognised centre of biotechnology research
with successful innovations in pharmaceuticals, diagnostics
and medical technology
Food Innovation Scania Goal of raising the return on investment in agribusiness to create
the “health food of the future” with multi-disciplinary
and cross-border research
Robot Valley Målaren lake valley Seeking to be leader in research and development
and manufacturing of industrial robots, field robotics
and robotics for medical/health care
Source: www.VINNOVA.se.
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Administrative boundaries
Regions map to the 21 administrative counties in Sweden, although in the
case of VINNVÄXT the program used functional as opposed to administrative
units. There are examples of clusters that cross administrative borders that are
not selected in their entirety (funding of biotech in one county but not the
adjoining counties) as well as examples of initiatives that span several
administrative regions (three in the case of Robot Valley).
Visanu promotes a number of other cross-cluster initiatives, such as
co-operation between four manufacturing industry clusters spanning at least
three counties. As an outcome of Visanu, several cluster initiatives in the
packaging area initiated a National Packaging Project, run by STFI Packforsk
(www.stfi.se), a national research institute. The project was initially co-financed
by Visanu.
While the national programs have not specifically targeted any
trans-national clusters, firms may be involved in such initiatives. One important
trans-national cluster success, supported by the EU INTERREG program, is in the
Öresund region that includes the Copenhagen metropolitan area in Denmark and
the neighbouring southern Sweden. Medicon Valley is a cluster encompassing
firms, universities and research institutions across both countries that is
considered an internationally leading biomedical research zone. The national
cluster programmes have not funded Medicon Valley.
During fall 2005, the Regional Cluster Program, run by Nutek, attempted to
promote international co-operation between Swedish clusters and other
European clusters by stimulating participation in various EU-projects. A limited
budget for financing an application was provided. In early 2006, the Sörmland
initiative biotechvalley.nu became part of a successful application, NetBioCluE.
5. Instruments
VINNVÄXT emphasises instruments that both develop the cluster around
collaborative R&D projects and provide business support. The aim of the
VINNVÄXT programme is to achieve efficient collaboration in each region
among companies, research institutes and public organisations. The goal is to
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● The external monitoring of the program was positive both regarding the
ambitions of agency co-ordination and the use of dialogue as a selection
mechanism. However, the time frame was considered too short for more
extensive impact from a systems perspective.
● The e-mail survey indicated that the process facilitators of the clusters were
particularly positive to the combination of learning, exchange of experience,
contact creation and “soft” investments in networking and process facilitation.
The national funding has also been important since it contributes to increased
legitimacy of the regional initiative.
Bibliography
Christensen, Lars (2005a), Formation for Collective Action: The Development of the BioFuel
Region, prepared for the VISANU programme publication 2005:10, Sweden.
Christensen, Lars (2005b), The Packaging Arena: The Development of an Innovative Cluster,
prepared for the VISANU programme publication 2005:11, Sweden.
Eurofutures (2005), Dialog och samverkan för kluster och innovationssystem – erfarenheter från
Visanu (Dialogue and Co-operation for Cluster and Innovation Systems – Experiences
from Visanu).
European Commission (EC) and Enterprise Directorate-General (2005), Annual Innovation
Policy Trends and Appraisal Report: Sweden 2004-2005.
Larsen, Kristina et al. (2005), “Towards the Information Society: the Case of Sweden”, in
Governance of Innovation Systems: Case Studies in Cross-sectoral Policy, OECD
Publications, Paris.
Lindquest, Goran et al., “Swedish Clusters”, Presentation dated 17 February 2003 accessed
from www.isc.hbs.edu/pdf/Swedish_Clusters_(Feb_2003).pdf.
Nutek (www.Nutek.se).
Nutek (2005), Näringspolitik – politikområde och aktörsstruktur – preliminär version (Business
policy – policy area and actor structure – preliminary version).
OECD (2003), OECD Territorial Reviews: Öresund Denmark/Sweden, OECD Publications, Paris.
OECD (2006), OECD Territorial Reviews: Stockholm, OECD Publications, Paris.
Thorsland, Jennie Granat et al. (2005), “The End of an Era? Governance of Swedish
Innovation Policy”, in Governance of Innovation Systems: Case Studies in Innovation
Policy, OECD Publications, Paris.
VINNOVA (www.VINNOVA.se).
Visanu (2005), Slutrapport för det nationella programmet för utveckling av innovationssystem
och kluster (Final Report for the National Programme for the Development of
Innovation Systems and Clusters).
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ANNEX 18.A1
Process IT Innovation
Refine, manufacturing
Health Technology Alliance
Food manufacturing PUCK, plastic boats
Sustainable Sweden S.E.
Kingdome of aluminium K-märkt, culture
Food Innovation
Green Factory Heavy Vehicles
Wireless communication, IT
Notes: Bold = Visanu, Italic = VINNVÄXT (except for Green Factory, which received some VINNVÄXT
funding).
Source: Government of Sweden, Nutek.
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PART II
Chapter 19
United Kingdom
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with a cross-Whitehall officials group, ran between late 1999 and early 2003.
The work of both groups was informed by a mapping of existing cluster activity,
published in February 2001.
At the same time, a joint DTI and DfEE (Department for Education and
Employment) White Paper entitled “Opportunity for All In a World of Change”
(the follow up to a 1998 White Paper) recognised the key role cluster development
could have on the regional economy. It encouraged Regional Development
Agencies (RDAs) to develop existing and embryonic clusters in their region,
building on their natural capabilities.
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latest knowledge and thinking from the UK’s science, engineering and
technology base to business. Collaborative Research and Development projects
must involve two or more collaborators, at least one of which is from industry.
The Technology Programme supports three categories of research: pure or
oriented basic research, applied research and experimental development.
● Knowledge Transfer Networks: are single national over-arching networks in a
specific field of technology or business application. It brings together a
variety of organisations, such as businesses (suppliers and customers),
universities, research and technology organisations, the finance community
and other intermediaries who will provide a range of activities and initiatives
to enable the exchange of knowledge and stimulation of innovation within
this community.
In July 2004, the government published the “Science and Innovation
Investment 2004-14” which set out the key targets for science and innovation
policy to improve the situation. The main objectives were:
● Raise total UK R&D spending to 2.5% of GDP by 2014, with business R&D
rising to 1.7% of GDP.
● Develop stronger knowledge transfer and exploitation of research.
● Position the United Kingdom as an acknowledged leader on science and
innovation issues.
● Mainstream science and innovation in decisions across government.
An update of the strategy in 2006 envisaged a much enhanced role for the
Technology Strategy Board – a private sector led consultative body set up
in 2004 – giving it a lead role in identifying areas for investment and an
operating structure independent from the DTI. A full review of current policy,
led by the former Industry Minister Lord Sainsbury, will report to the
government in mid-2007.
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Source: Government of the United Kingdom (Department of Trade and Industry), 2005.
from the overall budgets shown in Table 19.2 to achieve specific targets in
these two fields. Cluster initiatives were promoted by the DTI as one key
instrument that the RDAs could use in this regard.
To assist local policy makers, in April 2004 a Practical Guide to Cluster
Development was published. It draws on analysis and evaluation material,
setting out the critical success factors that can help clusters to flourish. The
report provides advice on how to design and measure a cluster strategy and
gives examples of the type of interventions that can encourage the successful
development of clusters. Nonetheless, the approaches, priority clusters and
funding levels vary from region to region.
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Bibliography
Center for Competitiveness (www.cforc.org).
Department for Education and Skills (www.dfes.gov.uk/skillsstrategy/).
Department of Trade and Industry (www.dti.gov.uk, www.dti.gov.uk/regional/clusters/
index.html).
Department of Trade and Industry (DTI), United Kingdom (1998), Competitiveness White
Paper: Our Competitive Future – Building the Knowledge Driven Economy, DTI
Publications, London.
Department of Trade and Industry (DTI), United Kingdom (2001), Business Clusters in the
UK: A First Assessment, DTI Publications, London.
East of England Development Agency (www.eeda.org.uk).
East Midlands Development Agency (www.emda.org.uk).
Motorsport Development UK (www.motorsportdevelopment.co.uk).
North East Process Industry Cluster (www.nepic.co.uk).
OECD (2005), OECD Economic Surveys: United Kingdom – Volume 2005 Supplement 2, OECD
Publications, Paris.
OECD (2006), OECD Territorial Reviews Newcastle in the North East, United Kingdom, OECD
Publications, Paris.
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PART II
Chapter 20
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Partner universities
1) University of Georgia
2) Medical College of Georgia
3) Emory University
Georgia
4) Clark Atlanta University
Research
5) Georgia Institute of Technology
Alliance
6) Georgia State University
Programmes
• Eminent Scholars Programme (attract leading researchers)
• National Centers for Research and Innovation
Firms (university research centres with considerable federal funding)
• R&D Labs and Equipment (funding at several university centres)
• Technology Transfer Programmes
(Technology Incubators, VentureLab, and Innovation Fund)
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Georgia
While the impetus for the GRA stemmed from the efforts of industry
leaders, the bulk of its financing is derived from the state government of
Georgia. The primary public partners are the Office of the Governor and the
Georgia Legislature. Governors have traditionally offered their support to the
GRA. Initially included in the early 1990s in the Governor’s Economic Recovery
Program, GRA has been the driving force behind state-funded economic
development initiatives with a strong research component.
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* These centres are: the Life Sciences Innovation Center (LSIC); Agriculture Innovation
Center (AIC); Aerospace Innovation Center; Information Technology Innovation
Center (ITIC); Maritime Logistics Innovation Center (MLIC); and the Manufacturing
Excellence Innovation Center (MEIC).
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McKinsey and Company report suggested that the state give priority to
attracting resources in three areas of comparative advantage given existing
resources and growth areas. They are telecommunications, biotechnology and
environmental technology.
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fund stands at USD 8 million with appropriations for that in 2000 and 2003.
The state’s innovation centres (six locations) receive about USD 2.7 million a
year from a special state fund (tobacco funds in the One Georgia Authority).
Other funding that is considered S&T funding include special research
buildings (such as the Nanotechnology Research Building – USD 45 million
in state bonds) that are put into the budget by the Governor as part of his
economic development program.
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Administrative boundaries
GRA covers the state of Georgia and therefore goes beyond local and intra-
state regional boundaries. However, there is clearly a strong concentration
around Atlanta, which at times has raised concerns among advocates for
economic development in more rural areas of the state. There is no specific
national or trans-national cluster support.
5. Instruments
The GRA’s key instruments are used to strengthen research skills and to
support entrepreneurship and innovation at different phases but with an
accent on the university-industry relationship.
● Identification and benchmarking: The GRA works with projects that self-select
for application and have the greatest potential economic impact for the
state. Benchmarking for clusters is not part of the programme, however
there is benchmarking with respect to other states in their ability to capture
federal research funds.
● Engagement of actors: The GRA plays the role of the leading hub in the state
for a number of different stakeholders involved in high-technology research
and its applications.
● Government services delivery: Participation in a GRA programme does not
necessarily imply that other services will be more organised around
programme participants.
● Skilled HR: The Eminent Scholars programme is considered the flagship
programme because it is used to attract renowned, international scientists to
the state. They are recruited to the university system based in part on a GRA
supplementary endowment. To date, 51 scholars have been recruited. The
focus of their research is primarily in advanced communications and
computing, as well as in the biosciences from optical systems to structural
biology. These research projects in turn help attract the best graduate students.
● Resource allocation and investment, including branding: GRA investments are
intended to increase resource allocation to the funding projects, through
federal R&D funds and private capital. It has been reported that federal
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agencies are more willing to fund research centres that have been funded by
the GRA. The branding of the various high-technology specialties is actively
promoted by the state.
● Entrepreneurship and Innovation: This is the other major focus of the GRA.
There are a number of different programmes that fall under this category as
described below.
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state, and more than 1 500 high-technology research jobs at universities were
created. In addition, over 1 000 publications and 500 Ph.D. and Masters
graduates were related to GRA investments. In terms of longer-term outcomes,
100 new companies were spun out of university research creating more than
2 000 new high-technology jobs. Alliance university partners have also
increased their research collaborations with industry by approximately 800%
since the early 1990s.
These results have contributed to the state’s improved economic
development. For example, Georgia has moved from the lower or middle tier
to the top tier of states on several measures of economic vitality. Georgia is
now 9th in the US in the number of biotech companies, increasing this
number between 1995 and 2002 by almost 65%, compared to a 37% increase
nationwide. Georgia also now ranks 7th in the infrastructure it takes to start
new companies, including venture capital (which from 1995 to 2000 grew from
USD 100 million to 1 billion).
Bibliography
Georgia
Cassidy, C. Michael (2005), “The Georgia Research Alliance: A strategy for building an
innovation economy for Georgia”, Presentation made at the State Science and
Technology Institute 2005 Annual Conference, Atlanta, GA, 8 September 2005.
Georgia Department of Economic Development (www.georgia.org).
Georgia Research Alliance (www.gra.org).
Georgia’s Intellectual Capital Partnership Program (ICAPP), economic development
program of the University System of Georgia (www.icapp.org).
Georgia Tech (www.gatech.edu).
Lambright, W. Henry (2000), “Catalyzing Research Competitiveness: The Georgia
Research Alliance”, Prometheus, Vol. 18, No. 4, pp. 357-372.
Shapira, Philip (2005a), “Innovation Challenges and Strategies in Catch-up Regions:
Developmental Growth and Disparities in Georgia, USA”, in Gerhard Fuchs and
Philip Shapira (ed.), Rethinking Regional Innovation and Change: Path Dependency or
Regional Breakthrough?, Springer Publications, New York, NY.
Shapira, Philip (2005b), “Rethinking Regional Innovation”, Presentation made at the
State Science and Technology Institute 2005 Annual Conference, Atlanta, GA,
20 October 2005.
Youtie, Jan, Barry Bozeman and Philip Shapira (1999), “Using an evaluability
assessment to select methods for evaluating state technology development
programs: the case of the Georgia Research Alliance”, Evaluation and Program
Planning, Vol. 22, pp. 55 64.
Youtie, Jan, Philip Shapira and Sushanta Mohapatra (2000), Technology Infusion:
Assessing Current and Best Practice Programs, Atlanta, GA: Georgia Tech Economic
Development Institute and the Georgia Tech School of Public Policy, September.
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US federal government
Drabenstott, Mark (2005), “A review of the federal role in regional economic
development”, Report for the Center for the Study of Rural America, Federal
Reserve Bank of Kansas City, May.
Economic Development Administration of the US Department of Commerce
(www.eda.gov).
EPSCoR/IDeA Foundation (www.epscorfoundation.org/cdi/).
US Department of Labor Employment and Training Administration WIRED Fact Sheet
accessed at www.doleta.gov/pdf/WIRED%20Fact%20Sheet.pdf.
US Domestic Policy Council, Office of Science and Technology Policy (2006) American
Competitiveness Initiative: Leading the World in Innovation, February, www.ostp.gov/
html/ACIBooklet.pdf.
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ANNEX 20.A1
National Centers
Center for the Engineering National Science Foundation-supported Engineering Research Center, focused on tissue
of Living Tissues engineering, is housed within the Institute for Bioengineering and Bioscience at the Georgia
Institute of Technology. To date, the Center has attracted USD 20 million in federal funding
to Georgia and partnered with some 21 companies in related industries.
The Center for Behavioural This Center grew out of one of the largest grants ever awarded by the National Science
Neuroscience Foundation. The Center, the only NSF Center for Science and Technology in the Southeast, is
a multi-institutional effort involving Emory University, Georgia State University, Georgia Institute
of Technology, and the Atlanta University Center schools. It has already brought nearly
USD 20 million in NSF funding to Georgia and added another USD 17.5 million over the next five
years. The Center offers programs for developing new technologies with commercial potential
and provides multiple bridges to the private sector.
The Packaging Research Housed at Georgia Tech, is led by a Georgia Research Alliance Eminent Scholar. GRA
Center (PRC) investments in the PRC have helped to generate a cumulative economic impact of some
USD 351 million in Georgia. The 25 industry members of the Center include Panasonic, Nokia,
Motorola, Sony, Rockwell Collins, Northrop Grumman and National Semiconductor; PRC also
has generated 4 start-up companies.
Southeast Collaboratory It was established through a USD 24 million dollar grant (one of only seven awarded nationwide)
for Structural Genomics from the National Institutes of Health’s National Institute of General Medical Sciences.
Southeast Collaboratory
for Biomolecular NMR It is co-ordinated by a GRA Eminent Scholar in NMR Spectroscopy at the University of Georgia.
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Per the state’s Innovation Index 2004, the biggest gap in innovation for the
state is in the middle of the process (development and start-up) as opposed to
the beginning (research) and the end (growth). Areas of above average
performance relative to other US states include: foreign exports as a per cent of
Gross State Product, total R&D per capita, patents per capita, awards of science
and engineering degrees, jobs in sectors that generate the majority of patents
and new products. Areas of below average performance include: the percentage
of workers with a Ph.D. in science and engineering, invention disclosures, and
university and federal R&D programmes.
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way of conceptualising the economy and supporting its growth. The leadership
of the Oregon Business Council, a roundtable of prominent business leaders,
worked with local economic development leaders on the idea of promoting a
very explicit cluster approach. The result of this collaborative initiative is the
Oregon Business Plan, a framework for the state to develop an action plan to
support economic growth. Both the sectoral clusters and the Oregon Clusters
Networks are an integral part of this plan.
Governor/
Legislature
of Oregon
Oregon
Dept. of Economic
Development
Oregon OregonInC
Business Council (public-private
Oregon
(CEO Roundtable) cross-sectoral
Business Plan
innovation council, 2005)
(2003)
11 industries
Oregon Clusters Signature Research
(cluster analysis
Network (2005) Centers (1 thus far)
underway)
Cluster initiatives
The two cluster approaches are coming from the private sector-initiated
Oregon Business Plan (OBP) entitled “Stepping Up”. This Plan is a 12-point
programme for the state that covers issues such as innovation, education,
economic development, infrastructure and public finance. The goal for the plan is
to increase the number of high wage jobs by developing traded-sector industry
clusters. The strategy is to develop the four Ps (people, place, productivity and
pioneering innovation) using 12 umbrella initiatives to make concrete steps to
realise the Plan strategy. Tracking of progress on these initiatives is publicly
available on the Internet. The Leadership Committee to spearhead these actions
is mainly public sector, but the Steering Committee is private sector. The Steering
committee helps gather information via interviews, focus groups, the annual
Economic Leadership Summit and written submissions by clusters.
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The Oregon Business Council (OBC) helps to develop the Oregon Business
Plan Agenda with input from Oregon’s clusters. It is an independent and
non-partisan association of top business executives that seeks to mobilize
business leaders to contribute to Oregon’s quality of life and economic prosperity.
Founded in 1985, OBC is patterned after the national Business Roundtable and
affiliate organisations in a number of other states. OBC members represent
Oregon’s largest employers, nearly a third of the state’s 100 largest companies, but
often work closely with other business organisations, nonprofits, and
government agencies to promote policies that improve Oregon life.
Oregon InC (the Oregon Innovation Council) is a cross-sector leadership
team created in 2005 by the Governor and State Legislature to drive the state’s
innovation strategy. Oregon InC’s mission is to identify Oregon’s innovation-
driven growth opportunities, maximise the state’s competitive advantages
and establish Oregon’s niche in the global economy. The Council is a coalition
of leaders from traded-sector industries, higher education and government.
The Economic and Community Development Department (OECDD) of the
state government provides economic and community development targeted at
firms, places and people. Oregon’s economic development system is designed to
meet state-wide needs as well as regional needs, including services for rural and
distressed communities. The OECDD provides integrated services to companies
and people doing business in Oregon, or looking to make new or further
investments, including assistance with areas such as workforce, incentives, data,
etc. The department works in partnership with several organisations to offer
assistance to communities, counties, ports, tribes, special districts, community
colleges and local economic development groups. It also encourages and
facilitates public-private partnerships.
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will seek to tap into these funds should the initiative be implemented. EDA
has aligned its programs to support and complement the new American
Competitiveness Initiative (ACI) by assisting distressed communities to integrate
their development strategies with the activities of the ACI, which include
investment in R&D, science, education and workforce training, and support for
business environments that encourage entrepreneurship.
In the spirit of this initiative, the Department of Labour has already
developed the programme WIRED (Workforce Innovation in Regional Economic
Development) to invest USD 195 million over three years in thirteen lagging or
dependent regional economies that are in labour markets spanning
administrative borders. The targeted regions are those affected by global trade,
are dependent on a single industry or are recovering from natural disaster. They
must show a strategic partnership that includes regional leaders. Actions to be
funded under the program include: a) strategy development; b) the development
of consensus on the agenda with the private sector (civic, business, investor,
academic, entrepreneur and philanthropic partners); and c) implementation
coaching. EDA is collaborating closely with the Department of Labour in the
implementation of the WIRED initiative with the understanding that successful
workforce development and economic development go hand in hand and must
be implemented jointly as part of a cohesive regional development strategy.
The US federal government has a longstanding tradition of supporting small
businesses generally. In addition, many SMEs in different high-tech clusters
actively pursue federal funds under the SBIR (Small Business Innovation
Research) and STTR (Small Business Technology Transfer) programs. They are
both competitively awarded, three-phase federal government programs designed
to stimulate technological innovation and provide opportunities for small
business. Projects funded often link small businesses and the top non-profit
research institutions. Six federal agencies reserve a portion of their R&D funds to
be awarded via the STTR program, and eleven federal agencies run programmes
under SBIR.
Oregon
Oregon’s OECDD as described above leads the state’s place-based
development efforts.
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and will identify “next steps” for Oregon’s public and private sectors. The aims
of the plan will generally be to: accelerate technology transfer into high
value and growth companies, facilitate cross sector collaboration to leverage
resources, develop entrepreneurial and workforce talent, and strategically
position Oregon so as to increase exports, inward investments and firm
recruitment. The Council is also developing an Innovation Network of
important stakeholders throughout the state.
Part of this innovation policy is to actively support the commercialisation
of research. The state has therefore given a mandate to the Council to “promote
investment in specialised research facilities and signature research centres
where Oregon has a distinct or emerging advantage for creating new products
and businesses”. The Council, along with OECDD, plans to have an annual RFP
process judging candidates based on their collaboration, commercialisation
possibilities, core competencies and competitive advantage. The first Signature
Research Center is the Oregon Nanoscience and Microtechnologies Institute.
OregonInC’s work is just beginning and spans more than just research.
They will be thinking strategically about how the state should best invest its
money and make recommendations. They will be overseeing both the Signature
Research Centres and other initiatives to support clusters. The Oregon Cluster
Network, which supports any cluster, will serve as a pipeline of clusters for the
programmes that OregonInC will establish. The OECDD is actively represented
on these committees to support the links across state programmes. The
Committees of OregonInC are:
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Administrative boundaries
The programme is designed to serve clusters found within the state;
therefore they may span local administrative boundaries.
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5. Instruments
For both of Oregon’s initiatives to support clusters, the engagement of
actors and the reorientation of government services and policies are the most
prominent instruments.
● Identification and benchmarking: In the context of the overall policy, the state
has identified major industrial clusters in Oregon. The cluster initiatives in
the Network go beyond the top 11 industry clusters. There is an active effort
to promote benchmarking of cluster (industry) performance in Oregon with
national statistics.
● Engagement of actors: After analysing the 11 industry clusters in greater
detail, the OECDD may promote greater engagement of actors through its
initiatives. The Network is specifically designed to bring together industry
leaders with university researchers, schools, media, venture capital, and
other resources as well as promote cross-cluster knowledge sharing and
collaboration. The state has also recently hired consultants to reinforce the
training of cluster facilitators, including in rural areas.
● Government service delivery: The OECDD is reorganising its orientation to be
focused on clusters, and in particular those top clusters driving the state’s
economic growth. Any cluster may make submissions to the Oregon
Business Plan such that the needs of their cluster are taken into account by
state policy. Regular Network meetings are designed to identify ways that
government policies and service delivery can better serve the development
needs of clusters.
● Skilled HR: Skilled HR is an integral part of the state’s Business Plan.
Workforce development may be part of different cluster initiatives but it is
not their primary focus at this time.
● Entrepreneurship and innovation: Innovation as an explicit goal is addressed by
a separate plan under development for the Significant Research Centers
that will promote greater research expertise in areas where Oregon has
unique opportunities. OregonInC’s plans for supporting other innovation
initiatives are being defined. The Network is focused on cluster initiatives
generally and seeks to promote entrepreneurship or innovation through
knowledge sharing.
● Resource allocation and investment (including branding): It is expected that in the
future the state level industrial clusters will benefit from more targeted
resource allocation at the state level. Brand Oregon has launched a new
national advertising campaign to promote Oregon’s industry clusters.
Therefore, being organised into a cluster helps facilitate marketing initiatives
supported by the state. The Network is open to all cluster initiatives so the
goal is not a competitive selection process that gives clusters a “label”.
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Bibliography
Oregon
Cortright, Joseph (1994), “Reinventing Economic Development: Ten Ideas for Market
Driven Approaches to Promoting Industrial Competitiveness”, Staff Report to the
Joint Legislative Committee on Trade and Economic Development, October.
Cortright, Joseph (2003), “Oregon Industry Clusters: A Statistical Analysis”, A report
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Department, May 2003.
Cortright, Joseph (2006), Personal communications, 5th April.
Oregon Business Council (www.orbusinesscouncil.org).
Oregon Business Plan (www.oregonbusinessplan.org).
Oregon Competitiveness Index (2005) (www.oregonbusinessplan.org/download/
2006_Competitive Index_web.pdf).
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Oregon Inc. (www.oregoninc.org).
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Development”, in the conference proceedings Exploring Policy Options for a New
Rural America, of the Federal Reserve Bank of Kansas City, September, pp. 103-120.
US federal government
Drabenstott, Mark (2005), “A review of the federal role in regional economic
development”, Report for the Center for the Study of Rural America, Federal
Reserve Bank of Kansas City, May.
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(www.eda.gov).
EPSCoR/IDeA Foundation (www.epscorfoundation.org/cdi/).
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accessed at www.doleta.gov/pdf/WIRED%20Fact%20Sheet.pdf.
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html/ACIBooklet.pdf.
350 OECD REVIEWS OF REGIONAL INNOVATION: COMPETITIVE REGIONAL CLUSTERS – ISBN 978-92-64-03182-1 – © OECD 2007
OECD PUBLICATIONS, 2, rue André-Pascal, 75775 PARIS CEDEX 16
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(04 2007 06 1 P) ISBN 978-92-64-03182-1 – No. 55525 2007
OECD Reviews of Regional Innovation
OECD Reviews of Regional Innovation
OECD Reviews of Regional Innovation
Competitive Regional Clusters
NATIONAL POLICY APPROACHES
Competitive
In today’s globalising world, many nations and regions are struggling to maintain their
competitive edge. The regional specialisations built up over decades are transforming
rapidly. Many regions that were historically production centres in a given sector are
Regional Clusters
losing out to lower-cost locations and reorienting to higher value-added niches. Yet even NATIONAL POLICY APPROACHES
some of these upstream activities are being off-shored. How durable are the competitive
strengths on which regional economies are based?
National programmes to promote cluster-based approaches − linking firms, people
and knowledge at a regional level − are being used to meet the challenge. Evolutions
in regional policy, science and technology policy and industrial/enterprise policy are
converging on the objective of supporting clusters at the regional level. Nevertheless,
policy makers face a series of difficult choices given limited resources. For example, they
may focus on the leading regions and sectors that drive national economic growth and
technological breakthroughs or the lagging regions that need to reorient their economies
to preserve jobs and diversify.
This report analyses the objectives, targeting, instruments and inter-governmental
role sharing used by 26 programmes in 14 OECD countries. It will be of interest to
policy makers, researchers, firms and others active in promoting innovation and
competitiveness.
ISBN 978-92-64-03182-1
www.oecd.org/publishing
04 2007 06 1 P
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